Political risk is a fact of life for global businesses. When international affairs led Russia to impose an embargo on goods from Canada, Toronto-based food merchant Ronald A. Chisholm Limited found itself with millions of dollars in perishable meat shipments in route to a Russian market that would not allow them to be delivered. “We first thought that any meat already in transit would be allowed to go through, which is usually the case of an embargo,” said Chisholm COO Gregg Badger. In this case, however, the border was closed to these shipments. Chisholm had never faced a political risk event of this magnitude.
Fortunately, the company carries trade credit insurance and political risk insurance coverage. Now it was time to see if these policies would fulfill their promise. The Russian embargo had created a situation that could truly imperil Chisholm’s business. “We were looking at a major loss,” said Badger.