Whether or not political risk insurance is purchased, organisations should function as though uninsured, adopting thoughtful risk management tactics, according to RIMS new Executive Report.

Leveraging Insurance and Risk Management to Address Political Risk outlines key considerations risk professionals should explore to effectively and proactively address political volatility.

The report features a glossary of key political risk insurance coverages and definitions, and identifies other political risk management strategies including contractual risk transfers, safety and security measures, balance sheet protections and the advantages of adopting a bottom-up risk management approach to combat political uncertainty.

“Changes in a country’s political structure or policies can lead to increased probability of loss,” the report notes. “Organisations that put robust risk management plans in place can benefit from lower political risk premium rates, because they have demonstrated to the underwriter that they understand their own risks and have taken an active role in reducing losses.”

Leveraging Insurance and Risk Management to Address Political Risk was authored by Tina Cameron, ARM, ARM-E, RF, senior manager of global insurance for World Vision International, with support from Gayle Jacobs, senior vice president, political risk and structured credit at Marsh Specialty. The report is available to all members of the association.

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