Political risk refers to the possibility of expropriation of assets, changes in tax policy, and the possibility of restrictions on foreign exchange transactions.
Political risk is the possibility that a country's political unrest or changes could have a negative impact on an investment's results.
A change in the executive, judicial, legislative, or military branches of government could cause instability that would have an impact on investment returns. Political risk, commonly referred to as "geopolitical risk," increases in importance as the investment time horizon lengthens. They are regarded as a specific kind of jurisdiction risk.
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