Increasing geopolitical tensions, protectionist sentiments, and ongoing trade disputes are leading to unprecedented uncertainty and risk ahead for multinationals with direct foreign investments, according to a report from Marsh.
The Political Risk Map 2019 rates over 200 countries and territories on the basis of short- and long-term political, economic, and operational stability, in addition to offering insight into where risks are most likely to emerge.
According to the report, the transition to an increasingly multi-polar world order of protectionism will increase in 2019, with the rising isolationist and protectionist sentiments and practices momentarily halting the process of globalisation.
Brexit, Russia’s relationship with the West, and trade tariff disputes between the US and China are all highlighted as important issues on the political risk landscape.
Additionally, the report suggests that the insurance market for political risks is growing, with the breadth of potentially catastrophic risks and the perception of what constitutes risk also rising.
It notes that businesses have “have arguably never faced such a breadth of challenges as they do today” and that it is vital for them to appreciate and assess the potential impact of these risks.
Evan Freely, global practice leader, credit specialties at Marsh, commented: “Businesses with direct foreign investments are facing an unprecedented breadth of challenges today from emerging economies to so-called developed economies.”
“In uncertain times, vigilance and broad, systemic risk analysis coupled with political and trade credit insurance, will be vital to minimising these threats.”