Political risk is a top concern forcorporate foreign investors from industrialized but alsodeveloping countries when venturing into emerging markets.At the same time, these investors maintain a positiveoutlook on economic and business prospects in the developingworld, which is expected to attract a growing share ofglobal foreign direct investment (FDI) as the world economyslowly, recovers. Positive business sentiment over emergingmarkets amid concerns over political perils point to asustained need to mitigate these perils. This, added to therise of South-based investors, offers opportunities andchallenges for the political risk insurance (PRI) industry.In the current context of high uncertainty, understandinghow investors perceive and deal with political risks helpsto map out the role of PRI in the emerging post-crisisinvestment landscape. This report focuses on FDI and PRI forlong-term investment, and only covers political risk indeveloping countries. Although political risk also affectsother forms of private capital flows, these are beyond thescope of this publication. The main findings of the reportare summarized as follows: i) while political risks topforeign investors' concerns, the global economic andfinancial crisis has not fundamentally altered FDI prospectsfor emerging markets; ii) concerns over political risks,combined with sustained FDI into emerging markets over themedium term, suggest a growing need for political riskmitigation and opportunities for the PRI industry; and iii)the emergence of South-based investors is increasinglyshaping the global FDI environment and presents regionalgrowth opportunities, but also challenges, for the PRI industry.