Political risk is the risk faced by investors and corporations that political decisions, events, or conditions will significantly affect the profitability of a business. This will include macroeconomic and social policies (fiscal, monetary, trade, investment, industrial, income, labour, and developmental), or events related to political instability (terrorism, riots, coups, civil war, and insurrection).
Tax havens with a low level of political risk and stable governments are attractive to investors and businesses. In contrast, countries with high levels of political risk are to be avoided like the plague. Liberia for example, was a thriving tax haven until the ongoing civil war destroyed it. The First Liberian Civil War went from 1989 to 1997 and resulted in 600,000 deaths. Saving tax is one thing, getting killed trying to save tax is a whole new ball game.