11 Apr 2018

Sovereign Risk

Finance feed by:

CA Nisha Bagla
B.com (Hons),CA
CA in Practice    •    15 Year 8 Month  experience

A nation is a sovereign entity. Any risk arising on chances of a government failing to make debt repayments or not honouring a loan agreement is a sovereign risk.

Such practices can be resorted to by a government in times of economic or political uncertainty or even to portray an assertive stance misusing its independence. A government can resort to such practices by easily altering any of its laws, thereby causing adverse losses to investors.

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