For decades, Canadian companies viewed political risk as a problem limited to developing economies – the kind of exposure faced by miners or energy firms operating in fragile states.
But that assumption no longer holds. According to Patrick Rengger (pictured), commercial account executive and senior advisor at HUB International’s Complex Risk Division, political risk has expanded well beyond its traditional borders.
“Political risk is deteriorating almost across the board,” Rengger said. “We’re seeing expropriation and nationalization in some regions, and political violence rising in others – sometimes both at the same time.”
Rengger said the risk landscape for Canadian and international businesses has changed fundamentally in the past few years.
While resource-rich regions in parts of Africa still experience government actions such as expropriation or nationalization – a concern for Canadian mining companies with foreign operations – other jurisdictions are now seeing different, but equally severe, threats.
In many markets, political violence has become the dominant concern, encompassing everything from targeted attacks against individuals and organizations to broader unrest that damages corporate assets.
“The kind of political violence we’re seeing isn’t just directed at governments,” Rengger noted. “It’s also aimed at NGOs, charities, and private companies operating in those countries.”
The result is a fragmented global risk map, where the nature of exposure depends less on geography and more on volatility – economic, social, or political. In some countries, the main threat is state-driven, through nationalization or confiscation. In others, it’s instability at the street level. But across regions, the trend line points the same way: higher unpredictability and weaker institutional reliability, Rengger said.
Perhaps the most concerning trend, Rengger said, is not just the rise in violence or government interference, but the erosion of legal and contractual certainty.
In an environment where international trade law and bilateral agreements once offered predictable frameworks for cross-border business, governments are increasingly treating contracts as “guides” rather than binding obligations.
Rengger warned that this shift undermines the foundations of global commerce. “We’re seeing governments and presidents taking arbitrary actions against companies in ways we haven’t seen before,” he explained. “Production-sharing agreements or concession contracts that were once rock solid are now being reinterpreted or ignored entirely.”
That deterioration of rule-based stability means that political risk is no longer limited to fragile or emerging markets. Even mid-tier and highly developed countries have shown signs of taking unilateral actions against foreign firms – whether through sudden policy changes, license revocations, or the selective enforcement of regulations.
Political risk insurance (PRI) – a product historically used by extractive industries – has evolved to address this broader array of exposures.
Rengger described it as “a broad sweep of coverages,” where insureds can tailor protection to their most pressing concerns rather than buy an all-in-one policy.
At its core, PRI covers four main categories of risk:
“Each of these risks can operate independently or overlap,” Rengger said. “In some countries, you’re worried about being expropriated. In others, you’re worried about political violence. Increasingly, it’s both.”
Recent geopolitical flashpoints have underscored just how quickly business stability can unravel.
Rengger pointed to Russia, where foreign companies abruptly lost access to their local revenues following the 2022 invasion of Ukraine, and Argentina, which suffered extended currency inconvertibility periods. Even in these relatively large markets, companies faced heavy losses when local controls prevented them from repatriating profits.
“In Argentina, for example, political violence wasn’t the problem, nor was expropriation,” he said. “It was the inability to convert and transfer currency that caused major disruptions.”
These examples demonstrate that political risk isn’t monolithic – it shifts depending on a country’s economic and political cycles. But taken together, they signal that even “known” risks can escalate suddenly when governments act unilaterally.
Unlike many types of insurance, political risk coverage must be secured before instability begins. Once events are underway, capacity tightens and premiums soar.
Rengger noted that PRI policies can be structured to last as long as 15 years, though five-to-seven-year terms are more typical. The long tail of the coverage is intentional: it flattens volatility and provides continuity through political transitions.
“You can’t wait until the revolution starts to buy protection,” he said. “When things change politically, they change fast.”
That long-term view makes PRI a key tool for companies looking to stabilize their risk profile over multiple investment cycles – particularly in sectors like energy, mining, infrastructure, and large-scale manufacturing.
The expansion of political risk into developed markets has also changed how brokers and clients think about it. Once seen as a niche product for frontier markets, PRI is now part of broader geopolitical risk management strategies that also consider trade sanctions, supply chain disruptions, and cyber exposures linked to political actions.
According to Rengger, the challenge for businesses today isn’t just identifying where risks exist, but recognizing how interconnected they’ve become. Currency controls, sanctions, and civil unrest are no longer separate categories – they can unfold as part of the same event.
That’s why he believes companies should consider political risk coverage as a form of strategic resilience planning, not just insurance.
“Ultimately, it’s about bringing some predictability to a world that’s increasingly unpredictable,” Rengger said. “You’re buying stability – not because you expect something to go wrong, but because you understand how quickly it can.”
