The
risk that a foreign government will significantly alter its policies or other regulations so that it significantly affects all
investment in that country. More broadly, it can apply to the risk that a nation will refuse to comply with an agreement to which it is a party, or that political violence will hurt an investment or business. For example, if one
exports goods to a foreign nation, and that nation elects a new government that enacts
protectionist tariffs, this will negatively impact all exports, rather than simply one export business.