Explain the term “Political Risk" and its various forms. Is Political Risk covered under Financial Risk? If so, explain the reasons for the same.

13. Political Risk is faced by and overseas investors, as the adverse action by the government of host country may lead to huge loses. This can be on any of the following form. Confiscation or destruction of overseas properties. Rationing of remittance to home country. Restriction on conversion of local currency of host country into foreign currency. Restriction as to borrowings. Invalidation of Patents Price control of products Though political risk is not a financial risk in direct sense but same can be included as any unexpected political change in any foreign country may lead to country risk which may ultimately may result in financial loss.