Multinational companies are reassessing their exposure to political and economic risks as global developments continue to disrupt trade, investment, and operations, according to Gallagher Specialty’s Q1 2025 report.
Structured credit and political risk insurance are becoming critical components of corporate risk management, especially for firms with interests in emerging markets.
The report details the growing range of geopolitical concerns affecting business environments, particularly in regions marked by unrest and volatility.
According to Gallagher’s risk intelligence partner, Pangea-Risk, demonstrations driven by political, ethnic and religious tensions are expected to intensify in May across countries including Armenia, Bangladesh and Nepal.
“In May unrest will likely intensify across several countries, as displaced Armenians, Islamist groups in Bangladesh and monarchist activists in Nepal escalate anti-government demonstrations,” Pangea-Risk noted.
Türkiye is experiencing increased detentions and legal crackdowns amid potential constitutional changes. In the Middle East and South Asia, continued militant activity in Pakistan and operations by Houthi forces in Yemen are contributing to operational risks, while Israeli military action in Gaza and Syria adds to regional instability. Tensions between India and Pakistan remain high after a fatal incident in Kashmir.
Trade relationships are also under pressure. New US tariffs have introduced economic strain in the Asia Pacific, targeting countries such as China, Vietnam, Cambodia, Bangladesh and Sri Lanka. These measures may disrupt manufacturing supply chains and reduce foreign currency inflows.
While several nations are seeking to contain the impact, China has imposed retaliatory tariffs and increased diplomatic engagement in the region. The disruption has added uncertainty for multinationals operating under the ‘China plus one’ model and may affect investment strategies in the region.
Gallagher’s national head of credit, surety and political risks, Racheal Tumelty, identifies political risk as a persistent concern for companies engaged in overseas ventures. She notes that Africa, in particular, remains susceptible to unpredictable political and economic shifts.
Structured credit and political risk insurance offer mechanisms to manage such uncertainty. Non-payment and non-delivery policies help firms recover losses from contract breaches. Pre- and post-shipment cover can protect exporters from supply disruptions or payment defaults caused by political developments. Political risk insurance provides coverage against events such as expropriation, forced divestment, political violence, currency inconvertibility, and discriminatory regulatory changes.
These insurance products are relevant for organisations operating in jurisdictions where government intervention or civil unrest may affect operations, asset mobility, or revenue flows. Firms may also be affected by embargoes, repudiation of contracts, or forced exit due to diplomatic breakdowns between host and home countries.
Businesses with global interests are encouraged to assess their exposure through comprehensive risk mapping and scenario planning. Keeping informed of regional developments and understanding the political climate can support more responsive decision-making.
Given the changing global risk dynamics, should political risk insurance now be viewed as a standard business requirement for cross-border investment? Share your views in the comments.
