Single Risk: Protect your business from political and credit risks

The concept of political risk, also known as Single Risk, pertains to a specific category of risk encompassing political, social, or security changes that could significantly impact the interests of a company, financial institution, bank, or investors within the scope of their business activities. This includes events such as conflicts, riots, civil wars, and more. Additionally, it extends to political decisions that hinder smooth transactions, such as blocked asset transfers, confiscation, authorities' unilateral refusal to meet obligations, embargoes, nationalization, expropriation, and the like.

Political risk is an integral component of project risk, particularly for large-scale industrial projects situated in unstable regions, emerging countries, or environments with deteriorating security conditions.

In such scenarios, Coface provides insurance covering a range of risks, including non-payment, wrongful termination of contracts, non-delivery of goods, asset confiscation, non-transfer of dividends, non-reimbursement of loan maturities, license cancellations, and more.

Single Risk insurance offers irrevocable coverage for both political and commercial risks, specifically addressing issues like the non-payment of receivables, within the scope of a unique and intricate contract or project spanning an extended period from the transaction's initiation to its conclusion.

Those opting for this insurance form typically include exporters, importers, investors, or companies seeking financial support for projects vulnerable to diverse threats such as receivables default, insolvency, non-transferability, rent non-payment, contract disruptions, and improper recourse to bonds. Single Risk also safeguards investments, assets, subsidiaries, and holdings abroad against risks like embargoes, armed conflicts, riots, strikes, wars, terrorism acts, confiscation, expropriation, nationalization, dispossession, and legislative changes.

Credit risk is the possibility that a debtor won't pay all or part of its receivables. This could be a business that bought goods or services from another company, or a business that has taken out a contract for a loan with a bank or financial institution. 

As a specialist in trade credit insurance, Coface evaluates credit risk on a continual basis to help its clients have a full understanding. Solvency depends on both internal factors within the company and external factors like location (country risk), the global economy, sector outlook (sectoral risk), or political risk.