The multiplication of protracted conflicts, the intensification of great-power rivalries, the expansion of sanctions regimes and the rise of domestic instability observed in recent years reflect the emergence of a new international environment in which states are reasserting their sovereignty strategies.
Public policy instruments — legislative, regulatory, fiscal, customs or financial — are increasingly mobilised as deliberate levers of sovereignty, illustrating how the concept now extends well beyond the sole control of territory. The exercise of sovereignty is progressively expressed in the economic and industrial spheres, through states’ capacity to define, amend or restrict the rules governing market access, asset ownership and the movement of capital.
This evolution has a direct consequence for companies operating internationally: the legal and financial stability of their investments now also depends on sovereign and unilateral decisions. Revisions of investment policies, foreign-exchange controls, sectoral restrictions, the reconsideration of trade agreements… such policy shifts concretely affect market access, export conditions, supply chains and the industrial strategies of multinational groups. A government decision may delay a project, suspend dividend transfers, invalidate a licence or challenge a public contract. Operational continuity and financial visibility can therefore be affected even in the absence of any physical damage.
Between 2022 and 2025, several global firms — including Orano in Niger, Air Liquide in Mexico, and Danone and Auchan in Russia — were confronted with state decisions that profoundly altered the conditions under which they operated or held local assets. Beyond these widely reported cases, numerous export contracts, concessions and licences have been affected by regulatory or political developments impacting their execution or profitability. For capital-intensive or strategic sectors — such as energy, infrastructure or heavy industry — this exposure is increasingly becoming structural.
This category of exposure, commonly referred to as political risk, encompasses situations in which a sovereign decision — legislative, regulatory or administrative — results in a financial loss by affecting the ownership of an asset, the ability to transfer funds or the performance of a contractual commitment. It differs from a violent event or physical damage: it stems from a state action that unilaterally alters the rules of the economic environment.
In 2026, geopolitical confrontation ranks as the leading short-term global risk identified in the Global Risks Report published for the Davos forum. At the same time, the AMRAE Geopolitical Risk Barometer indicates that 92% of surveyed companies discuss geopolitical risk within their governance bodies and that 82% incorporate it into their risk mapping. Yet only 5% report having trained their teams to manage it.
Strategic awareness is therefore advancing faster than operational capabilities. In many organisations, political risk is reviewed at a central level without being fully integrated into investment processes, contractual frameworks or financial structuring. At the operational level, teams often struggle to identify, formalise and consolidate vulnerabilities, given their multiplicity and evolving nature. Without a structured approach to risk exposure, it becomes difficult to manage it, arbitrate between options and identify the most appropriate mitigation levers.
Among these levers, insurance transfer represents a structuring tool that is attracting growing interest from companies. In a context of global trade restructuring, this type of insurance demonstrates its potential as a strategic lever, enabling companies to navigate volatility while continuing to seize opportunities.
Complementary to Political Violence and Terrorism (PVT) coverage — which responds to physical damage — political risk insurance is designed to secure the financial consequences of a sovereign decision in the absence of material damage. CEND (Confiscation, Expropriation, Nationalisation, Deprivation) coverage protects invested capital; CI/NT (Contract Interruption / Non-Transfer) coverage secures financial flows and the performance of contractual commitments; and Single Risk solutions allow the coverage of a specific project.
Although the political risk insurance market remains relatively stable, access to capacity and optimal terms depends closely on the nature of the risk and on the quality of its analysis and presentation.
In this context, the Risk Manager plays a central role in structuring and professionalising political risk management. Three levers appear particularly decisive:
- Mapping exposures: to define insurance needs, the Risk Manager must first identify and qualify the exposures. Risk mapping thus becomes a strategic tool for identifying critical scenarios, assessing their likelihood and objectifying their potential impacts. The Risk Manager must identify dependencies on sovereign decisions (exposed assets, licences and contracts dependent on governmental authorisations, financial flows subject to foreign-exchange controls, critical dependencies within the value chain, etc.). A dedicated mapping exercise can distinguish between different types of exposure (country, financial, contractual, etc.) while incorporating a quantitative assessment of potential impacts.
- Structuring and formalising data: establishing a political risk programme requires consolidated and well-documented data on exposures. Insurers typically analyse ownership structures, net investment values, the nature of contractual counterparties and the geographical distribution of exposures. This requirement leads the Risk Manager to clarify and consolidate elements that are not always readily available. These elements will form the basis for indemnification in the event of a claim and can also help objectify the financial materiality of sovereign exposures, thereby informing strategic decision-making.
- Challenging existing arrangements: in a relatively stable yet continuously evolving insurance and brokerage market, periodically retendering political risk programmes is not merely a budget optimisation lever. It also makes it possible to identify market innovations, explore alternative programme structures and adjust coverage in line with evolving exposures. Opportunities exist, particularly for companies capable of documenting their risks precisely and demonstrating the robustness of their governance.
KYU supports Risk Management departments in positioning geopolitical risks as a strategic issue that is fully understood and effectively managed at Executive Committee level. Our support includes the in-depth mapping of exposures, the structuring of critical data, the review of existing arrangements and the deployment of new solutions aimed at securing operations while strengthening the robustness and adequacy of insurance programmes.
