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Risk in Context Podcast: Uncovering the Benefits of Political Risk Insurance

In this episode of our Risk in Context podcast, Marsh’s Julie Martin and Stephen Kay and Alexia Ash, director for risk quantification at IHS Markit, discuss the findings of the study and how this information can help businesses as they consider their investments in developing countries.

03/08/2022

Political risk insurance can provide financial security for businesses making investments in foreign countries, helping to protect them against monetary losses stemming from government actions. Although political risk insurance (PRI) has been available for several decades, efforts to quantify the value of PRI are new.   A recent study by Marsh and S&P Global evaluated the potential benefits of PRI.

In this episode of our Risk in Context podcast, Marsh’s Julie Martin and Stephen Kay and Alexia Ash, director for risk quantification at S&P Global, discuss the findings of the study and how this information can help businesses as they consider their investments in developing countries.

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Key takeaways

Predicting country risk can be challenging.

Insufficient data has often contributed to difficulties understanding the extent of political risk in a country and the value that political risk insurance can add to a project.

Political risk insurance can provide added value.

Rather than being an expense, the study indicates that political risk insurance can enhance the internal rate of return of an insured project.

Quantification can aid funding efforts.

Data-based insights into the value of political risk insurance for individual projects have the potential to broaden investment interest and expand the pool of potential buyers for a foreign project.

About our speakers

Stephen Kay

  • United States

Stephen is Managing Director at Marsh Credit Specialties based in New York and Montreal, working on strategic clients. He is a 16-year veteran of Marsh following a career in credit and political risk underwriting and banking at AIG, Citibank, Royal Bank of Canada and EDC. Prior to his current role, Steve was global Head of Infrastructure Business Development at Marsh and formerly led Marsh’s US Credit Specialties team focusing on non-payment insurance for development banks, multilateral clients and commercial banks, and on political risk insurance (PRI) for lenders and corporate clients. Stephen recently co-authored Marsh’s white paper co-published with S&P Global entitled “A new perspective on the cost and benefits of political risk insurance”, which takes an innovative look at Political Risk Insurance through a quantitative lens, using a capital budgeting framework.

Alexia Ash

  • Netherlands

Alexia Ash leads the economics and country risk quantification team at S&P Global. She is responsible for quantitative inputs and projects that require translation across risk metrics and benchmarks. She is also a quantification expert within the country risk team, where she helps develop scores methodology.

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