Insurance and Management of Political Risk Exposure in Developed Economies and Serbia
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The paper explores the risks, associated with government actions, which reduce the value of the company, in other words, a political risk. The purpose of this research is to determine the theoretical, institutional, regulatory management and implemented activities of political risks in different countries (the USA, the UK, France, Japan and Germany). The aim of this paper is the analysis of the characteristics of political risks, the analysis and the characteristics of the risk of the insurance policy from the standpoint of global, regional and state agencies and private insurers as well, determining the interdependence of political risks and country risks. The analysis begins by reviewing different ways of entering foreign markets (exports, foreign direct investment, contractual agreements and establishment of subsidiaries), all of which imply exposure to political risk. After that, political risk and exposure of its basic elements are defined, as well as methods that are applied in the assessment and the management of political risks. This paper concludes with an overview of political risk insurance coverage and sums insured in selected countries, and how political risk is underwritten and priced.
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