Global Sourcing Logistics: How to Manage Risk and Gain Competitive Advantage in a Worldwide Marketplace

exposures, the best approach to structuring CNE&D cover-

age is to insure all four perils in a single policy. This ap-

proach minimizes the problems that could otherwise

result from disputes with insurers as to whether a particu-

lar action falls into one category or another.

Another common political risk for which insurance is

available is contract frustration. This entails the nonperfor-

mance or frustration of a contract with a host government

entity or private buyer in a third world country as a result of

an invalid action. An invalid action is an activity detrimental

to U.S. interests that would be considered inappropriate or il-

legal in the United States. It can be further defined as an ac-

tion that wrongfully invalidates an overseas transaction ...