Intra- and Inter-State Conflict Conflict itself will continue to be a key geopolitical risk in 2020. Iran may use its proxies in the region to increase pressure on the US and its Gulf State allies, with Iraq a potential focal point of activity. In the region’s other major conflict, Syrian President Bashar al-Assad will consolidate territorial gains made in 2019, with the support of Russia, making peace negotiations with the opposition unlikely. US-Iran relations are likely to dominate the risk landscape in 2020. They are also the world’s top two emitters of greenhouse gases. Non-honoring of an arbitration award by a government entity (breach of contract). Europe 21:55, 18-Nov-2020 Ericsson warns Sweden's ban on rival Huawei is 'a risk for the economy' Giulia Carbonaro Share . Their coalition of convenience, designed to prevent a snap election and sideline the League party, may be short-lived. Political risks are also rising in India. Divisions within the ruling African National Congress are also likely to weigh on reform momentum. With some exceptions, emerging markets (EMs) will benefit from a recent return to stability in global financial markets, allowing most of them to avoid the severe balance of payments pressures caused by rapid capital outflows. moody's defines credit risk as the risk that an entity may not meet its contractual, financial obligations as they come due and any estimated financial loss in the event of default. The Joint Comprehensive Plan of Action will come under further pressure in 2020, after European states triggered a dispute resolution mechanism in January 2020. zoom in. We provide an overview of major upcoming developments. 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 U.S. election has consumed our attention, making it easy to lose sight of what’s going on around the rest of the world. Our interactive map is live so you can check the risk ratings for the countries that you are doing business in or considering for the future. The most recent data available — for 2018 and from 1999 to 2018 — were taken into account. 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. Confiscation, expropriation, nationalization, and deprivation of physical assets or equity investment. 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. 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. Relations between the two countries remain weak, following the January 2020 US drone strike that killed a leading Iranian general. Copied. The countries and territories affected most in 2018 were Japan, the Philippines as well as Germany. The drivers of increased trade protectionism remain in place, and are likely to be exacerbated by deteriorating US-China relations during the pandemic. 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. West African states will struggle to manage security risks in 2020, as Islamist militants increase activity in the Sahel. Both countries have approved the US-Mexico-Canada Agreement, NAFTA’s successor. Maps | RiskMap 2020 ... Risk ratings for piracy, criminality, conflict, territorial disputes, terrorism and militancy. Research Report Climate-Related Financial Disclosure in the Canadian Financial Sector. Targeted assassinations, attacks on military bases and/or critical energy infrastructure are all possible, while Iran may also intensify its activity in the Strait of Hormuz, generating risks for commercial shipping. rate. Contract frustration or cancellation due to default by government, or other government acts. While economic data from Europe showed a tentative move toward recovery, fears of a second wave of infections may yet undermine momentum. Progress on denuclearization on the Korean peninsula will be slow as US-North Korean relations have reached an impasse, following a rapprochement in 2018. 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. Pricing assets during a pandemic has been tough, with little visibility on the trajectory of Covid-19 infections and the threat of fresh lockdowns looming. 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. 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). North Korea will be cautious to maintain personal goodwill between its leader Kim Jong-Un and President Trump, but will be reluctant to give up its nuclear weapons program in exchange for sanctions relief. Political instability has spiked following the removal of President Omar al-Bashir in a coup in April 2019. Protest risks have not been confined to Latin America — incidents also occurred in Iraq, Iran, Lebanon, France, and Hong Kong. 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. 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. In 2019, GDP grew 1%, at a slower pace than 2018 (2.7%). New Delhi: India under Narendra Modi is the fifth biggest geopolitical risk of 2020, according to the world’s leading political risk consultancy, Eurasia Group. Political risk has increased in a number of Latin American countries, as governments find it increasingly challenging to balance economic reforms and social stability. As a result, Fitch Solutions increased Greece’s short-term political risk index (STPRI) from 61.0 to 65.2, one of the largest improvements in Europe. 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) . Moreover, elections in Togo, Côte D’Ivoire, Guinea, Burkina Faso, and Mali could generate political instability. In 2019, business losses due to political risk were higher than ever. We see geopolitical risk as a material market factor. This year's report was originally published on 6 January 2020 and updated on 19 March 2020. The data is drawn from World Risk Review, our proprietary country risk platform. political risk evaluation index 2020 (january 2020) no risk country 0 0,10 0,20 overall evaluation rank country classification p.r. Over the past decade, Tunisia had an average annual growth of around 5%, but the economy stalled following the political, economic and geopolitical upheaval which has affected the country since 2009. However, each region has its own risk profile, which needs to be properly understood. 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. Businesses can find potential solutions to various aspects of political risk through three related, but distinct, marketplaces. With Canada also expected to sign the deal into law shortly, its implementation may alleviate concerns among businesses of supply-chain disruption in North America. However, long-term debt sustainability in many EMs will be weakened by the pandemic, as governments deploy additional spending and weak economic activity drags on revenues. All of which could impact commercial real estate. Pandemic containment measures have frozen economic activity in many states, while some have faced collapsing tourism revenues, or weak global commodity prices. This study investigates whether geopolitical risks influence Chinese firms' cash holdings. 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. Far from filling the gaps on critical issues like climate change, poverty reduction, and … 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. Pricing assets during a pandemic has been tough, with little visibility on the trajectory of Covid-19 infections and the threat of fresh lockdowns looming. 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). The International Monetary Fund (IMF) forecasts that the global economy will shrink by 4.9% in 2020. Far from filling the gaps on critical issues like climate change, poverty … As a result, the post-COVID recovery is likely to be uneven across countries and sectors. 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. The Global Climate Risk Index 2020 analyses to what extent countries and regions have been affected by impacts of weather-related loss events (storms, floods, heat waves etc.). Abandonment of assets due to war, terrorism, and other forms of political violence. 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. Issues related to global trade will continue, resulting in persistent political and economic uncertainty for businesses. In contrast, Brazil is likely to continue investor-friendly economic reforms, although municipal elections in October 2020 may slow progress. Pre-existing tensions will be exacerbated by growing scrutiny of governments’ handling of COVID-19. The Benchmark Index (GPR) uses 11 newspapers and starts in 1985. While the Political Risk Map 2020 highlights a challenging geopolitical and economic outlook, there are pockets of significant opportunity. Businesses can be exposed to political risks including currency inconvertibility, trade embargoes, seizure of assets by host governments, and political violence. RiskMap is the leading annual forecast of political and security risk, compiled by Control Risk experts worldwide. This update to the Political Risk Map 2020 draws upon data from the Marsh JLT Specialty’s World Risk Review platform. 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. 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 At the core of unrest has been dissatisfaction with falling standards of living, growing levels of poverty, and prolonged periods of austerity measures. But a terrorist attack on oil infrastructure in Saudi Arabia could result in crude prices surging in a matter of hours. Drawing on data from Fitch Solutions, Marsh’s Political Risk Map 2020 explores the changing risk environment, highlighting the implications for firms operating globally. Agreement Repudiation. Please log in to access the full marsh.com site. Polling by the Kaiser Family Foundation in June 2020 estimated that as many as 26 million people participated in demonstrations in the three months to June 2020, making it the largest movement in US history. 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. The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. The most important geopolitical risks in 2020 could come from two sources. The pandemic’s onset largely froze existing protest movements, with the risk of disruptive protests falling in places like Chile and Hong Kong. Notes: We identify specific words related to geopolitical risk in general and to our top risks. Political Risk Outlook 2020 – Executive summary Download the report 16 January 2020. Elevated debt levels pose notable risks to financial stability in many markets amid a more fragile global growth outlook, tendency toward fiscal and current account deficits, slowing productivity growth, and a growing preference for riskier borrowing. Trade tensions are also likely to amplify, if or when a global economic recovery takes hold. Economic and political risks will be intertwined in 2020. "There is no negotiated agreement that will turn the gears of … Putting aside the geopolitical risk… Recent weeks have exposed these challenges. Trade disputes could cost the global economy US$700 billion in lost output this year, and businesses remain pessimistic about the outlook. This period of transition between the election and a new administration is ripe for a geopolitical risk event, says one strategist. Insecurity will continue in 2020, despite increased security cooperation and promises of more French troops. 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. 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. 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. While neither side is expected to seek a direct military confrontation, an unintended escalation is possible. In 2020, 40% of ratings increased by between 1 and 1.4. The Country Economic Risk rating is an indicator of the propensity for economic adjustment including significant devaluation and/or high inflation and increases in the level of credit defaults among domestic businesses. We see geopolitical risk as a material market factor. Power Shifts: 2019 in Review, 2020 U.S. Election Outlook. Instead, the top risk in 2020 is likely to be America's politics. 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. Export/import restrictions, causing losses on trade transactions. A higher STPRI score represents increased political stability and is one piece of Fitch Solutions’ overall political risk index score. However, risks remain elevated within Mexico. Focus is made on the effects on cryptocurrencies, oil, gold and stock markets. The Cambridge Centre for Risk Studies will hold a launch event for the 2020 update of the Cambridge Global Risk Index. Physical damage to assets due to political violence, including war, and resultant losses of business income. In late 2019, destabilizing anti-government protests occurred in Colombia, Chile, Ecuador, Haiti, and Bolivia. All risk ratings referenced in this report were produced by Marsh JLT Specialty’s World Risk Review. Global Risk Report Quarterly Update - Q2 2020 Summary Global Risk Report is based on Country Risk Index (GCRI) which is a unique country risk-rating model that determines the existing and future level of country risk by assessing various qualitative and quantitative factors. South Africa will struggle to significantly boost its economic performance in 2020, despite a government economic recovery plan, while contingent liabilities for state-owned enterprises remain significant. Canadian Crude Index ... Oil Glut Overshadows Geopolitical Risk In 2020 By Nick Cunningham - Jan 16, 2020, 6:00 PM CST. image expand icon. However, the US-Iran relationship is unlikely to improve and will generate instability in the region. Amid a challenging global outlook, Africa is expected to be an economic outperformer in 2020. The US electorate is highly polarized, with President Trump’s impeachment exacerbating divisions, despite his acquittal on February 5. Incidents were notable because of the level of violence that occurred in some instances. National lockdowns, curfews, and the health risks posed by COVID-19 have limited the risk of civil unrest in recent months. For the best experience, please upgrade to a supported browser: Businesses operating in both developed and emerging markets face a complex and often volatile political risk landscape in 2020. The transition toward a multipolar world order seen in 2019 — with multiple challenges to multilateralism and free trade — is expected to continue. Managing Risk While the Political Risk Map 2020 highlights a challenging geopolitical and economic outlook, there are pockets of significant opportunity. Fiscal challenges will limit governments’ ability to respond to protesters’ demands. Geopolitical risks have been rising around the globe. Brexit and the high-stakes US-China trade negotiations remain key concerns. 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. 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. 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 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. There is a growing risk of disruptive protests in response to the reintroduction of containment measures, as willingness to comply with restrictions wanes. north-south regional divides, increasing the risk of election related violence. The first is that Iran’s retaliation against the killing of its most important military leader is not over yet. In the first half of 2020, one-third of Moody’s sovereign ratings actions related to COVID-19, and all downgraded sovereigns were EMs. If the early 2000s were marked by the global war on terror, the 2010s by post-crisis economic recovery and the rise of populism, the 2020s appear set to become the decade of rage, unrest and shifting geopolitical sands. The two countries are likely to remain strategically opposed on issues such as protection of intellectual property and state support for certain industries. Blockage of cross-border cash flows due to currency inconvertibility and non-transfer. "It's the first time in history of our firm that a domestic political risk is No. [prod, eu2, s7connect, crx3, nosamplecontent, publish, crx3tar]. We find that firms tend to hoard more cash as a precautiona… 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. Geopolitical and socioeconomic risks. Those perceived to have failed to effectively manage the pandemic could face anti-government protests, increasing the risk of instability. Global debt levels remain a cause for concern, with debt in emerging markets reaching 170% of GDP by the end of 2018. Please log in to access the full marsh.com site. 18 November 2020. 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 Geopolitical Acts (GPA) index only includes words belonging to Search groups 5 and 6. Wrongful cancellation by government of permits, licenses, or concessions. Iraq is likely to be the immediate focal point for US-Iranian confrontations, elevating political risk in the country. Geopolitical risk is distinct from existing measures of economic, ﬁnancial and political risk. 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. More than half of the countries in the Americas saw their country economic risk rating increase by more than 1 between January and July 2020. Over the course of 2020, climate risk will be more consistently priced into credit decisions and capital markets. The two countries account for more than 40% of global GDP. How has the Geopolitical Risk Factor performed? The index is … 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. They must address economic imbalances through structural reforms, yet doing so poses risks to social stability. Caldara and Iacoviello calculate the index by counting the number of articles related to geopolitical risk in each newspaper for each month (as a share of the total number of news articles). Iran’s economy will also struggle in the face of stringent US sanctions, spurring protests. The first geopolitical risk is in second place overall, with a GBI of 45 (up from 36 in the previous report). It remains possible that the military will seek to delay the transition to democracy. Only 23% of countries posted any increased economic risk. 2017 likely to pay a heavy price, due to intensification of armed conflicts Oil prices and geopolitical risk in the Middle East is another major factor that deserves investor attention. Since January 2020, all 197 countries rated by Marsh JLT Specialty’s World Risk Review have seen their country economic risk increase, compared to just 60 countries in the same period in 2019. 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. Sino-American rivalry is expected to deepen in 2020, particularly as the US presidential election approaches in November. 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. 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. Russia’s increased role in the Middle East will continue through, for example, its support for the Syrian government. 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. Geopolitical risk is the number one global corporate risk. Pre-existing tensions will be exacerbated by growing scrutiny of governments’ handling of COVID-19. Given the imminent end of Donald Trump's presidency, the tension between Israel and Iran becomes glowingly salient. 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2020 geopolitical risk index 2020