Sovereign immunity

(1) Risk of default on a sovereign loan. This is normally less risky than dealing with sub-sovereign bodies or local private companies (depending on the creditworthiness of these bodies).
(2) The risk that a host country government will default in its contractual undertaking with a project or another project participant, such as under guarantees, indemnity agreements, or input and offtake contracts.
(3) Risk of a loss caused by a negative change in a foreign government´s policies, its credit rating or its failure to fulfil a debt obligation for example through appropriation of assets held in a foreign country. Some of these risks can be insured, e.g. through the Multilateral Investment Guarantee Agency of the World Bank.