and coverage should be tailored to meet the risk, whether it
is for nationalization, currency inconvertibility, license can-
cellation, war, or other situations. Other areas that should be
addressed are as follows:
Deductibles and coinsurance
Waiting period
Warranties and exclusions
Method of reporting of exposures
Coverage for business interruption and protection of
Loss of market, delay
Changes or fluctuations in currency, an area for which it
is becoming more difficult, if not impossible, to arrange
Currency for claims payments
War risks
Cost, which appears to be controlled by market condi-
tions, current economic and political situations, and qual-
ity of presentation, is typically a significant corporate
expenditure. Premiums vary greatly with each risk, and
compiling checklists comparing quotas is a good method
for fair evaluation.
Most political risk coverages exclude export credit (the
proximate cause of loss emanates from the private buyer).
Risks such as nonpayment and contract frustration are sig-
nificant exposures when dealing with private buyers. It is
important to determine whether the ultimate buyer is pri-
vate or governmental, because interests may be jointly
held. The time to make this determination is before the
policy is secured, not after a loss has occurred.

Get Global Sourcing Logistics: How to Manage Risk and Gain Competitive Advantage in a Worldwide Marketplace now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.