The better the information, the better the functioning of the markets. Poor information adds risk. The problems caused by poor information occur at many levels, all of which affect the riskiness of foreign investment. Economists make a distinction between risks that can be insured against and those that cannot. In the former, loss occurs with a more or less known frequency, and precautions can be taken either by setting aside reserves or by buying insurance.
Risk is a clear and certain cost of business.
Uninsurable risk is so unpredictable that the bad events inevitably come as a surprise. They occur infrequently, but when they happen, the consequences can be catastrophic. Unpredictable risk greatly increases the cost of doing business. It is a public service, therefore, to reduce such risk. While unpredictable risk cannot be insured against, the system can be designed to reduce it.