IN MANY LANGUAGES - Revista PIB

StrategyCHOOSE YOUR tYpE OF risKthere are 4 types of threat covered by insurancecompanies:+ EXPROPRIATIONOR NATIONALIZATIONwhen a governmenttakes possession ofthe assets and rightsof the foreign investor.+ BREACH OF CONTRACTwhen a government or state-ownedcompany breaks a contractwith the foreign investoror service provider.Source: Keith Martin/Aon Risk Solutions+ INCONVERTIBILITY OF CURRENCYwhen the Central Bank of the countryreceiving the investment banslocal currency conversion or thetransfer and remittance of moneyoutside the country. This doesn’tinclude the risk of FX devaluation.+ POLiTICAl violence acts ofterrorism, civil unrest, strikes,protests and wars. May includephysical risks and loss of profits.political problems. And the insuredcompany definitely wouldn’t like toadmit to the host government that itdoesn’t trust the country’s politicalsecurity.The work of specialized consultancies,such as AON and Marsh, isto analyze the geopolitical scenarioof the region where the companyplans to invest and signal the bestoptions in the area of insurance. “Weseek solutions to mitigate risks, inthe case of companies with assets orplants abroad or that enter into businessdeals with other countries andgovernments”, explains the consultantfrom Marsh Brasil. Companieswant to know how to protect theirinvestments abroad — either in set-wness of government bureaucracyand/or courts). Brazilian multinationalsare seeking the services ofrisk analysis companies and insurersto protect themselves against thesefour types of risk.“It is a very mature market in Europeand the US and it is starting togrow in Brazil”, says Kiyoshi Watari,leader of the credit insurance divisionof Marsh Brasil, another sectorcompany. AON estimates that itreceived in recent years around 25requests for a price quote for insuranceagainst political risks. However,not every price quote becomesa contract: Keith Martin calculatesthat only four or five national companiescurrently have a policy to coverlosses or damages from politicalrisks abroad. He can’t name names.“The private political insurance marketis highly confidential”, he says.Neither insurers nor insured companiesare interested in revealing theexistence of this policy — insurersaren’t because they expect the governmentto assume the coverageof any costs incurred as a result ofAFP PHOTO/STR28 revistapib.com.br