What is covering of political risk in SAP IS-B-RA-CL - Default Risk and Limit System?

SAP Term: covering of political risk

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: Amount or percentage that covers a collateral provision in a third country in the case of an impending country risk.

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• Key Concepts: 
  Covering of political risk is a feature of the IS-B-RA-CL Default Risk and Limit System in SAP. It is a risk management tool that helps companies protect themselves from losses due to political events such as wars, revolutions, or changes in government policy. The system allows companies to set up limits on their exposure to political risk and provides them with the ability to monitor and manage their risk levels. 
  
  How to use it: 
  The IS-B-RA-CL Default Risk and Limit System can be used to set up limits on a company's exposure to political risk. This can be done by setting up a limit for each country or region in which the company operates. The system also allows companies to monitor their risk levels by providing them with real-time updates on political events that could affect their operations. 
  
  Tips & Tricks: 
  When setting up limits for political risk, it is important to consider the potential impact of different types of events. For example, a company may want to set a higher limit for countries that are more prone to political instability or have a history of civil unrest. Additionally, companies should also consider the potential impact of changes in government policy, such as new taxes or regulations. 
  
  Related Information: 
  The IS-B-RA-CL Default Risk and Limit System is part of SAP's Risk Management Suite, which provides companies with tools for managing and mitigating various types of risks. Other features of the suite include credit risk management, market risk management, and operational risk management. Additionally, SAP also offers a range of other solutions for managing risks associated with financial transactions, such as fraud detection and compliance management.