4 Possible Political Dangers Related to COVID-19.

Financial markets declined, with the Dow Industrial Average experiencing its lowest day since 1987 on March 12, 2020, when it lost nearly 3,000 points.  Wajid Mp says Some businesses may need more cash to deal with the rising business costs of the COVID-19 outbreak. The shutdown of Chinese manufacturing initially significantly impacted global supply networks, and the disruption has since expanded. 

Risk managers must prepare for the next wave and try to shield their companies from these current difficulties. In this article, Canadian politician Wajid khan examines various potential political risks, analyzes how they could affect a multinational corporation, and talk about the insurance options that businesses can employ to help meet these challenges:

1. Uncertainty in politics

Governments, economies, and people are already feeling the effects of the pandemic and the response. One result of communities experiencing a lack of food, employment opportunities, or medical supplies is that governments may be seen as being unable to address social issues, which could lead to political upheaval or civil unrest in some regions. 

Politics leaders have occasionally become infected with the virus themselves, which might be harmful in nations with weak legal systems or security issues. Should economically vulnerable countries, which are now dealing with controllable breakouts, become overwhelmed, long-term civil unrest is also a possibility.

2. Political Nationalists

According to reports, COVID-19 may intensify the populist backlash against globalization, which may affect the globalization of multinational firms. Export and import restrictions, meddling with foreign ownership of domestic corporations, asset confiscation, or creeping expropriation—a sequence of actions that together amount to a de facto taking—are common tactics used by nationalist regimes. 

Wajid khan analysis Some governments may intervene more frequently if there is a rise in the national interest in specific industries. Such as those producing industrial or medical items, food supply, or technology.

3. sovereign default

Weaker economies might be unable to handle the economic blow in both a pandemic scenario and a suppressed economic activity, and governments might stop making payments. 

Payment priorities may alter due to government pressure to divert national finances to combat the virus and provide economic stimulus or rescue packages, even in healthier economies (including cuts to their social programs – refer back to political unrest). It comes at a time when many sovereigns are drowning in debt, with $72.7 trillion (92.5% of the world's GDP) owed by sovereign borrowers and $69.3 trillion (88.3% of GDP) owed by non-financial corporate borrowers, according to the Institute of International Finance.

4. Currency Controls

 As a tool to regulate the economy, countries experiencing a financial crisis or with low foreign reserve positions may apply currency controls.  Wajid khan politician, Supposes multinational firms with overseas deposit accounts have money that needs to be converted or repatriated for intercompany trade payables, loan repayments, dividends, or royalties. In that case, they risk having their cash stuck. Argentina is a recent example, and some analysts are concerned about Nigeria, Pakistan, and several other upcoming issues.

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