Quick Definition

Jurisdiction risk refers to the potential financial losses that can occur due to changes in a country's legal, regulatory, or political environment.

Examples

• 1A company operating in multiple countries faces jurisdiction risk if one of these countries suddenly changes its tax laws, potentially increasing operational costs.
• 2Investors in foreign real estate may encounter jurisdiction risk if the local government imposes new property ownership restrictions on foreigners.
• 3Businesses exporting goods to another country might face jurisdiction risk if that country imposes new tariffs or trade barriers unexpectedly.

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