Political Risk

The financial risk that a country's government will suddenly change its policies.

Also known as "geopolitical risk".

Investopedia Says:
This is a major reason that second and third world countries lack foreign investment.

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Investment risk associated with the changes in government policies that may have a dramatic effect on financial instruments. For example, if federal legislation is passed removing the tax-exempt status of tax-deferred buildup of the cash values in Life Insurance policies and Annuities one of the primary reasons for purchase of these products would be eliminated.