While economic data from Europe showed a tentative move toward recovery, fears of a second wave of infections may yet undermine momentum. The consultancy’s annual ‘Top 10 Risks’ of the year list is considered one of the foremost geopolitical indicators among global investors, multinational firms and various financial and business consultancies. The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. The data is drawn from World Risk Review, our proprietary country risk platform. One thing is for sure, geopolitical risk is back with a vengeance, which should favor safe-haven investment instruments like, for example, gold as well as the U.S. dollar and the “price” of crude oil. In 2019, business losses due to political risk were higher than ever. In Argentina, 2020 will provide clarity on President Alberto Fernández’s policy priorities, as investors remain wary of a possible return to state interventionism in the economy. In Chile, long one of Latin America’s most stable operating environments, Fitch Solutions decreased the STPRI score from 74.8 to 66.7, the largest reduction in the region and third largest globally. However, the US-Iran relationship is unlikely to improve and will generate instability in the region. In Italy, the coalition between the Democratic Party and Five Star Movement will come under strain in 2020 as the parties have diverging views on many issues. Strained government finances could also push some governments to seek alternative sources of revenues, possibly leading to contract alterations or expropriation in more profitable sectors. Private Equity and Mergers & Acquisitions, Political Risk Map 2020 - Mid-Year Update for Asia-Pacific, Political Risk Map 2020 - Mid-Year Update for Middle East and Africa, Political Risk Map 2020 - Mid-Year Update for the Americas, Strikes, Riots & Civil But a terrorist attack on oil infrastructure in Saudi Arabia could result in crude prices surging in a matter of hours. Venezuela’s political crisis is unlikely to be resolved in 2020. Conflicts grew by +100% between 2007 and 2015. Only 23% of countries posted any increased economic risk. This year's report was originally published on 6 January 2020 and updated on 19 March 2020. Maps | RiskMap 2020 ... Risk ratings for piracy, criminality, conflict, territorial disputes, terrorism and militancy. Eurasia Group's Top risks For 2020 The time has come to update our Top Risks 2020, taking into account how the coronavirus has accelerated the trends that worry us most. The Country Economic Risk peril index assesses the risk of economic instability, and the potential effects this may have on businesses operating in the country or territory. China and the United States decoupling in the technology sphere is another political risk in 2020, considered by the Eurasia Group as "the most impactful geopolitical development for … There is a growing risk of disruptive protests in response to the reintroduction of containment measures, as willingness to comply with restrictions wanes. However, downside risks stem from the continent’s rising sovereign debt load. Please log in to access the full marsh.com site. Oil prices and geopolitical risk in the Middle East is another major factor that deserves investor attention. This is particularly true of Africa, where the risk profile varies quite significantly from country to country. Policy formation will slow as both parties look ahead to the election and the impeachment trial against President Trump deepens political divisions, already evident in the split control of Congress. Trade tensions and geopolitical turbulence are also adding to the economic uncertainty – in particular the potential fallout from the United States and China’s trade stand-off. Our geopolitical risk calendar details the key upcoming geopolitical events across the world. Our country risk platform provides risk ratings for 197 countries across nine perils covering the security, trading, and investment environments. The pandemic’s onset largely froze existing protest movements, with the risk of disruptive protests falling in places like Chile and Hong Kong. In the same period in 2019, no country posted a rise of this magnitude. For the best experience, please upgrade to a supported browser: COVID-19 has complicated an already volatile political risk landscape. All risk ratings referenced in this report were produced by Marsh JLT Specialty’s World Risk Review. Forced divestiture of foreign investment on order of the investor’s home government. The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. Far from filling the gaps on critical issues like climate change, poverty reduction, and … 30 January 2020 | Geopolitical Political transitions can increase country risk and disrupt investment, lending, and insurance, while directional swings in public policy, international relations and/or social attitudes impact market sentiment and shape real business environments. [prod, eu2, s7connect, crx3, nosamplecontent, publish, crx3tar]. Tensions on the Korean peninsula also look set to rise, with North Korea severing communication lines with the South and blowing up a joint liaison office in June 2020. International focus on COVID-19 may also be masking simmering tensions between Iran and the US. Image: World Economic Forum Global Risks Report 2020 In fact, respondents to the Global Risks Perception Survey, which underpins the report, rank issues related to global warming – such as extreme weather and biodiversity loss – as the top five … This study examines trends in climate-related financial disclosure among 58 financial firms in Canada including banks, pensions, insurance, financial Crowns, and credit unions over three reporting cycles (2017, 2018, 2019). It remains possible that the military will seek to delay the transition to democracy. Putting aside the geopolitical risk… Elsewhere in the region, tentative progress toward a ceasefire in Yemen appears possible as Saudi Arabia moves towards de-escalation – reducing airstrikes and engaging in talks with Houthi rebels. Report 2020 Insight Report 15th Edition In partnership with Marsh & McLennan and Zurich Insurance Group. In late 2019, destabilizing anti-government protests occurred in Colombia, Chile, Ecuador, Haiti, and Bolivia. While the Political Risk Map 2020 highlights a challenging geopolitical and economic outlook, there are pockets of significant opportunity. Although the triggers for protests are unique to each country, many of the underlying drivers — poor service provision, economic reforms, falling standards of living, and inequality — will remain in 2020, making further protests possible. In some cases, such as South Africa, COVID-19 has exacerbated existing weaknesses in public finances, while the simultaneous drop in global commodity prices has also hit many oil-producing nations. The International Monetary Fund (IMF) forecasts that the global economy will shrink by 4.9% in 2020. Register for map updates and to receive our latest political risk analysis. The geopolitical flashpoints that we highlighted in March 2020 have not gone away. Our expectation that tech firms will be increasingly caught in the crossfire is playing out, while countries find themselves under geopolitical pressure to choose sides. In July 2020, the UK government announced that Chinese firm Huawei’s technology would be banned from its 5G networks. Almost half (47%) of the countries in the Middle East and Africa have seen their country economic risk rating increase by more than 1 between January and July 2020. ontainment measures have frozen economic activity in many states, while some have faced collapsing tourism revenues, or weak global commodity prices. This survey reviews the empirical literature concerning the impacts of geopolitical uncertainty as expressed by the highly innovative Geopolitical Risk Index (GPR) by Cardara and Iacoviello (2019). A permanent resolution is unlikely in 2020, however. Given this scenario, Marsh JLT Specialty has published the Political Risk Map 2020: Mid-Year Update, providing risk ratings for 197 countries across nine perils covering the security, trading, and investment environment from January to July 2020. Fiscal challenges will limit governments’ ability to respond to protesters’ demands. Businesses will be caught up in this rivalry, as the two countries politicize trade and investment relationships. Pre-existing tensions will be exacerbated by growing scrutiny of governments’ handling of COVID-19. They must address economic imbalances through structural reforms, yet doing so poses risks to social stability. We see geopolitical risk as a material market factor. ... in a conference call to discuss the geopolitical advisory firm's annual risk-assessment forecast. West African states will struggle to manage security risks in 2020, as Islamist militants increase activity in the Sahel. The PRI market has developed considerable depth in recent years, and available insurance capacity has never been better. Issues related to global trade will continue, resulting in persistent political and economic uncertainty for businesses. Almost two-thirds (64%) of the countries in the region experienced an increase in their country economic risk rating of more than 1 between January and July 2020. The tech industry is expected to emerge as a particular battleground for the two countries, as both look to reduce technological dependence on the other. Iran may also look to pressure the US’s regional allies, asserting itself in the Strait of Hormuz, where any significant disruption could impact oil supplies and thus the global economy. Of respondents to the World Economic Forum’s Global Risks Perception Survey 2019-2020, 78% expected economic confrontations to increase in 2020. However, the underlying drivers of unrest in many economies — declining standards of living, inequality, and corruption — remain, and in many cases may be exacerbated by the pandemic’s economic impact. Hong Kong experienced the second largest deterioration in STPRI score globally, as the territory was beset by months of disruptive, violent protests, which strained Hong Kong’s relationship with mainland China. Findings from this year’s Political Risk Map 2020 echo the World Economic Forum’s Global Risks Report 2020 earlier this year, which found that economic confrontations between major powers are among the most concerning risks for 2020. The Political Risk Map 2020,produced by Marsh JLT Specialty’s Credit Specialties Practice, is based on data from Fitch Solutions, a leading source of independent political, macroeconomic, financial, and industry risk analysis. Markets across Sub-Saharan Africa, Asia, and beyond require investment in transport infrastructure, logistics networks, and power assets. Cooperation between China and the US on the pandemic has been weak, and tensions have risen over Hong Kong SAR, Taiwan, and the South China Sea. The Political Risk Index – Spring 2020 Analysing trends and patterns seen over the last quarter in the world’s most vulnerable countries By Paul L. Davidson | May 29, 2020 The impact of the coronavirus (COVID-19) has had huge impacts to countries across the world. The election may also see deep fake media adding to the risks. Only 23% of countries posted any increased economic risk. The Cambridge Centre for Risk Studies will hold a launch event for the 2020 update of the Cambridge Global Risk Index. 2017 likely to pay a heavy price, due to intensification of armed conflicts Opposition figure Juan Guaidó has struggled to dislodge President Nicolas Maduro from power, despite being recognized as president by 50 countries. RiskMap 2020. Political instability has spiked following the removal of President Omar al-Bashir in a coup in April 2019. Foreign expertise and financing can be critical in developing such assets. The Phase One trade deal reached between the two states is at risk of being abandoned, posing risks to a post-COVID recovery in global trade volumes. At the core of unrest has been dissatisfaction with falling standards of living, growing levels of poverty, and prolonged periods of austerity measures. The Citizenship Amendment Act triggered protests beginning in December 2019, and may generate disputes between India’s state and central governments in 2020, challenging the authority of Prime Minister Narendra Modi. In Côte D’Ivoire’s October 2020 general election, candidates have already invoked. Our geopolitical risk calendar details the key upcoming geopolitical events across the world. Economies globally will increasingly have to choose between US and Chinese technology partners. Relations between the two countries remain weak, following the January 2020 US drone strike that killed a leading Iranian general. The pandemic is likely to drive rising sovereign credit risks in the coming quarters. 18 November 2020. Iran’s economy will also struggle in the face of stringent US sanctions, spurring protests. Following the political risk index specific for Western Europe (2016) and emerging countries (2013), Coface launches a global index for 159 countries. Political risk has increased in a number of Latin American countries, as governments find it increasingly challenging to balance economic reforms and social stability. Elsewhere, tensions between Russia and the West are expected to continue in 2020. Bolivia’s political environment will remain precarious in 2020, following the resignation of President Evo Morales in November 2019 amid allegations of electoral fraud. Divisions within the ruling African National Congress are also likely to weigh on reform momentum. The most recent data available — for 2018 and from 1999 to 2018 — were taken into account. In July 2020, for example, Serbia faced a wave of unrest following government plans to reintroduce weekend curfews and criticism of the government’s handling of the crisis. Power Shifts: 2019 in Review, 2020 U.S. Election Outlook. In addition to the PRI market outlined above, firms can cover associated security and people risks through political violence and terrorism coverage, as well as kidnap and ransom insurance. In late 2019, many Latin American countries were confronted with this dilemma, exemplified by protests in Bolivia, Chile, Colombia, and Ecuador. As the US presidential election approaches, relations are likely to deteriorate further. The EU will look to offset Brexit’s financial impact by seeking increased member contributions to its budget, while the new European Commission President, Ursula von der Leyen, will seek to launch plans for a European “Green Deal” in 2020. The drivers of increased trade protectionism remain in place, and are likely to be exacerbated by deteriorating US-China relations during the pandemic. Protest risks have not been confined to Latin America — incidents also occurred in Iraq, Iran, Lebanon, France, and Hong Kong. Increased volatility in previously stable regions and the uncertainties that follow political change are key geopolitical drivers of familiar and emerging risks. Iran’s accidental shooting down of a passenger plane during the recent incidents with the US is likely to strain relations with the international community, while European governments have formally triggered a dispute mechanism in the 2015 nuclear deal, increasing pressure on its sustainability. Political risk in the UK improved, following a December 2019 election that gave the Conservative Party the largest parliamentary majority in a decade, boding well for overall stability. The drivers of increased trade protectionism remain in place, and are likely to be exacerbated by deteriorating US-China relations during the pandemic. 100%. Contract frustration or cancellation due to default by government, or other government acts. 31 polonia 32 cile 33 cipro 34 mauritius 35 costa rica 36 italia 37 israele 38 malta 39 romania 40 ungheria 41 croazia 42 bulgaria 43 emirati arabi uniti 44 panama 45 grecia 46 malesia 47 qatar 48 serbia With many governments looking to ease pandemic lockdown measures, attention is focused on the shape and size of an economic recovery. Rwanda experienced the largest improvement in STPRI score in Africa, increasing from 64.2 to 68.5. Pre-existing tensions will be exacerbated by growing scrutiny of governments’ handling of COVID-19. Oil prices took a beating starting in 2014 because of a glut of supply. Countries that entered the crisis with weaker fundamentals are likely to face deeper economic scars, while those able to deploy large fiscal packages and effectively manage the virus are best placed for recovery. Geopolitics will dominate the risk environment in the Middle East. Abandonment of assets due to war, terrorism, and other forms of political violence. Meanwhile, US-Mexico tensions are likely to ease in 2020. Their coalition of convenience, designed to prevent a snap election and sideline the League party, may be short-lived. The U.S. election has consumed our attention, making it easy to lose sight of what’s going on around the rest of the world. In contrast, Brazil is likely to continue investor-friendly economic reforms, although municipal elections in October 2020 may slow progress. Managing Risk While the Political Risk Map 2020 highlights a challenging geopolitical and economic outlook, there are pockets of significant opportunity. Businesses can find potential solutions to various aspects of political risk through three related, but distinct, marketplaces. Geopolitical risk is the number one global corporate risk. Global debt levels remain a cause for concern, with debt in emerging markets reaching 170% of GDP by the end of 2018. The geopolitical flashpoints that we highlighted in March 2020 have not gone away. The two countries account for more than 40% of global GDP. This could mean risk of a regional conflict or war, and the possibility of total confrontations between Israel, U.S. and Iran should not be excluded. Notes: We identify specific words related to geopolitical risk in general and to our top risks. Instead, the top risk in 2020 is likely to be America's politics. In the first half of 2020, the pandemic was accompanied in many countries by a renewed focus on racial inequality and injustice, following the death of George Floyd and others in the US, leading to a wave of protests and demonstrations. We temporarily stopped using Twitter as an input as of July 3, 2020. Please log in to access the full marsh.com site. [eu1, prod, s7connect, crx3, nosamplecontent, publish, crx3tar], Private Equity and Mergers & Acquisitions. We also found a unidirectional causality relationship running from geopolitical risk index to tourism (Table 5, row 4). This period of transition between the election and a new administration is ripe for a geopolitical risk event, says one strategist. Following the UK’s departure from the EU on January 31, focus will shift to negotiations over its future relationship with Europe. The countries and territories affected most in 2018 were Japan, the Philippines as well as Germany. No scores rose by this magnitude in January-July 2019. political risk evaluation index 2020 (january 2020) no risk country 0 0,10 0,20 overall evaluation rank country classification p.r. The first geopolitical risk is in second place overall, with a GBI of 45 (up from 36 in the previous report). At the time of writing, Iran and the US appear to be pursuing de-escalation following a significant flare-up in early 2020, which saw the targeted killing of an Iranian general by the US followed by ballistic missile launches against US facilities in Iraq. "It's the first time in history of our firm that a domestic political risk is No. The most important geopolitical risks in 2020 could come from two sources. The coalition will face pressure ahead of a referendum on parliamentary reform and negotiations on the future of the Ilva steelworks. Europe 21:55, 18-Nov-2020 Ericsson warns Sweden's ban on rival Huawei is 'a risk for the economy' Giulia Carbonaro Share . Export/import restrictions, causing losses on trade transactions. Amid a challenging global outlook, Africa is expected to be an economic outperformer in 2020. Many countries have deployed extensive fiscal stimulus packages to support the private sector, fund additional health care spending, and invest in a post-COVID recovery, all at a time of reduced government revenues. Caldara and Iacoviello use the same methodology to construct a Geopolitical Risk Historical Index (GPRH), which uses three newspapers and starts in 1899. The Joint Comprehensive Plan of Action will come under further pressure in 2020, after European states triggered a dispute resolution mechanism in January 2020. Internationally it poses increasing management challenges, particularly at board level. The U.S. election has consumed our attention, making it easy to lose sight of what’s going on around the rest of the world. Moreover, risk ratings have increased by a larger magnitude compared to the same period last year. Outside of the US-China rivalry, recent months saw a Sino-Indian confrontation in the Himalayas in which at least 20 troops were killed. 30 January 2020 | Geopolitical. Between January and July 2019, 97% of the economic risk ratings that increased did so by between 0.1 and 0.4, compared to just 7% in 2020 (see Figure 1). Given the imminent end of Donald Trump's presidency, the tension between Israel and Iran becomes glowingly salient. We could not reject the null hypothesis of non-Granger causality relationship from geopolitical risk index to real GDP, and from geopolitical risk index to tourism at a (p < 0.05) significance level The International Monetary Fund forecasts growth in Sub-Saharan Africa to accelerate to 3.5% in 2020/21, up from 3.3% in 2019. Political transitions can increase country risk and disrupt investment, lending, and insurance, while directional swings in public policy, international relations and/or social attitudes impact market sentiment and shape real business environments. The US electorate is highly polarized, with President Trump’s impeachment exacerbating divisions, despite his acquittal on February 5. There is a growing risk of disruptive protests in response to the reintroduction of containment measures, as willingness to comply with restrictions wanes. Drawing on data from Fitch Solutions, Marsh’s Political Risk Map 2020 explores the changing risk environment, highlighting the implications for firms operating globally. Sino-American rivalry is expected to deepen in 2020, particularly as the US presidential election approaches in November. We find that firms tend to hoard more cash as a precautiona… Political risk insurance (PRI), alongside a sophisticated understanding of the political risks facing a business, can help firms to manage their exposure and realize opportunities. Civil unrest, including violent protests, erupted in Hong Kong, Chile and India, to name just a few (47 countries witnessed a surge in civil unrest in 2019, according to a Verisk study) [1]. The pandemic’s onset largely froze existing protest movements, with the risk of disruptive protests falling in places like Chile and Hong Kong. US politics in 2020 will focus on the November 2020 presidential election, which will likely reflect a highly polarized electorate. However, firms looking to capitalize on such opportunities must navigate a complex and dynamic risk environment. In Europe, although the UK left the EU on January 31, its future relationship with the EU — from economic to political to security — will take years to address. However, each region has its own risk profile, which needs to be properly understood. Research Report Climate-Related Financial Disclosure in the Canadian Financial Sector. The two countries are likely to remain strategically opposed on issues such as protection of intellectual property and state support for certain industries. For example, one result of the January clash between the US and Iran has been increased calls within Iraq for US troops to leave the country, a move that could contribute to resurging terrorism risks in Iraq. Blockage of cross-border cash flows due to currency inconvertibility and non-transfer. Managing Risk. Pandemic containment measures have frozen economic activity in many states, while some have faced collapsing tourism revenues, or weak global commodity prices. Agreement Repudiation. A higher STPRI score represents increased political stability and is one piece of Fitch Solutions’ overall political risk index score. We see geopolitical risk as a material market factor. Emergence of competing trade blocs. The first geopolitical risk is in second place overall, with a GBI of 45 (up from 36 in the previous report). The politicization of trade and investment relationships has extended to public health, with leaders in both countries routinely blaming the other for the pandemic. The Benchmark Index (GPR) uses 11 newspapers and starts in 1985. Peak MNCs. Brexit and the high-stakes US-China trade negotiations remain key concerns. As lockdown measures ease, some protest movements will probably resume, as new motivations for demonstrations emerge. zoom in. Commotion, Currency "There is no negotiated agreement that will turn the gears of … This period of transition between the election and a new administration is ripe for a geopolitical risk event, says one strategist. The private PRI market offers a set of credit and political risk coverages that policyholders can buy individually or together to create a bespoke insurance program. Non-honoring of an arbitration award by a government entity (breach of contract). Economic and political risks will be intertwined in 2020. Managing Director, US & Canada Credit Specialties Practice Leader, US Practice Leader, Political Risk & Structured Credit | Credit Specialties. Combination of two major components - the security risks (conflict and terrorism) and the political and social risks - allows a complete ranking of the political risk. Physical damage to assets due to political violence, including war, and resultant losses of business income. RiskMap is the leading annual forecast of political and security risk, compiled by Control Risk experts worldwide. In the first half of 2020, one-third of Moody’s sovereign ratings actions related to COVID-19, and all downgraded sovereigns were EMs. Copied. Tencent, one of the largest internet companies in China, provides online … Here’s how the Geopolitical Risk Factor (GRF) has performed on a cumulative basis over the past 3 years: Cumulative Returns: Geopolitical Risk Factor (1/1/17 - 1/23/20) Here, we can see that the factor experienced a steep decline throughout most of 2017, bottoming out at -1.44% on 8/7/17. The index is then normalized to average a value of 100 in the 2000-2009 decade. This is particularly true of Africa, where the risk profile varies quite significantly from country to country. Geopolitical risk dominates in early 2020 From coronavirus to impeachment proceedings to inverted yield curves, there is more than enough content to stir the economic waters this week. How has the Geopolitical Risk Factor performed? Chinese telecoms firm Huawei embodies these challenges — the US has increased pressure on allies to not use the company’s technology — a situation that is unlikely to change in 2020. Many governments across the region face particularly acute debt and fiscal pressures. ... 2020, from $4.056 trillion on January 7, 2019. As the US presidential election plays out, much attention will be placed on any Russian attempts to interfere as it did in the 2016 election, straining relations further. The conference will feature key research from the Centre on modelling catastrophe risk to business activities, as well as provide perspectives on their new and emerging risk challenges. In 2020, President Sebastián Piñera’s government will implement a US$5.5 billion spending package and pursue constitutional reforms in a bid to quell protests. In July, two US fighter jets approached an Iranian passenger plane in Syrian airspace, and days later Iran’s revolutionary guards fired a missile at a replica aircraft carrier in the Strait of Hormuz.