Case Studies

Political Risk Map 2021

by Mark Rowe

Social inequality is a pervasive risk across multiple regions – particularly in the Americas and Europe. In the future, inequality is likely to influence elections, contribute to political and economic nationalism, and could create conditions that spark open conflict. That’s according to a report by an arm of the insurance broker and risk adviser Marsh.

Stephen Kay, Global Head of Political Risks, Marsh Specialty, said: “As the world recovers from the effects of COVID-19, we expect the issues of social inequality, country economic risk, and strategic resource nationalism to take centre stage in influencing political decision making. Despite many areas of heightened risk, opportunities remain for corporate entities, financiers, and investors. Insurance-backed political risk and credit solutions can help to secure trade and investment capital, unlock liquidity, and enable growth that will fuel and sustain the recovery from COVID-19.”

The Political Risk Map 2021 is based on data from Marsh Specialty’s World Risk Review platform. It rates 197 countries and territories across nine indicators relating to security, trading, and investments. The firm says that its ‘map’ mirrors the World Economic Forum’s (WEF) Global Risks Report 2021, which reported that the pandemic is increasing disparities between emerging economies and industrialised nations. It is also driving social fragmentation which, in the next five to ten years, will weaken geopolitical stability.

Meanwhile a new survey by the market research company IPSOS and the WEF found that a majority, almost 60pc expect a return to pre-COVID normal within the next 12 months; including 6pc who think this is already the case, 9pc who think it will take no more than three months, 13pc four to six months, and 32pc seven to 12 months (the median time). About one in five think it will take more than three years (10pc) or that it will never happen (8pc).

At a global level, expectations about how long it will take before one’s life can return to its pre-COVID normal and how long it will take for the pandemic to be contained are nearly identical. These findings suggest that people across the world consider that being able to return to “normal” life is entirely dependent on containing the pandemic.

And a recent ‘Global Trends 2040‘ report by the National Intelligence Council (NIC) in the United States, for the incoming president Joe Biden, pointed to a ‘more contested world’, where “communities are increasingly fractured as people seek security with like-minded groups based on established and newly prominent identities; states of all types and in all regions are struggling to meet the needs and expectations of more connected, more urban, and more empowered populations; and the international system is more competitive—shaped in part by challenges from a rising China — and at greater risk of conflict as states and nonstate actors exploit new sources of power and erode longstanding norms and institutions that have provided some stability in past decades”.

For that report in full visit the ODNI website.

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