Far from filling the gaps on critical issues like climate change, poverty reduction, and … US politics in 2020 will focus on the November 2020 presidential election, which will likely reflect a highly polarized electorate. The two countries account for more than 40% of global GDP. image expand icon. They are also the world’s top two emitters of greenhouse gases. 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 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. Iran’s economy will also struggle in the face of stringent US sanctions, spurring protests. Emergence of competing trade blocs. The Joint Comprehensive Plan of Action will come under further pressure in 2020, after European states triggered a dispute resolution mechanism in January 2020. 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. How has the Geopolitical Risk Factor performed? West African states will struggle to manage security risks in 2020, as Islamist militants increase activity in the Sahel. 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. Regulatory changes may look to increase government royalties, potentially weakening operating environments. 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. 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. The challenge in risk forecasting, and indeed the key geopolitical threat the world is facing in 2020, is the unpredictability of both black swan events and human behavior. The two countries are likely to remain strategically opposed on issues such as protection of intellectual property and state support for certain industries. We temporarily stopped using Twitter as an input as of July 3, 2020. 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. At the same time, resilience to economic shocks is likely to be reduced in 2020. The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. 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. Caldara and Iacoviello use the same methodology to construct a Geopolitical Risk Historical Index (GPRH), which uses three newspapers and starts in 1899. 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. zoom in. Blockage of cross-border cash flows due to currency inconvertibility and non-transfer. This is particularly true of Africa, where the risk profile varies quite significantly from country to country. Given the imminent end of Donald Trump's presidency, the tension between Israel and Iran becomes glowingly salient. National lockdowns, curfews, and the health risks posed by COVID-19 have limited the risk of civil unrest in recent months. This reflects President Paul Kagame’s dominant political position and policy stability, which supports continued economic growth and a stable business environment. November 8, 2020 12:21 pm 0 An index that measures geopolitical risk based on newspaper reports predicts bitcoin returns according to a study of studies. Non-honoring of an arbitration award by a government entity (breach of contract). Brexit and the high-stakes US-China trade negotiations remain key concerns. 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. U.S. 2020 Elections: Greatest Geopolitical Risk From trade wars and climate change, to U.S. domestic politics, these are the top risks in 2020, according to new research. The need to balance social and economic stability is likely to continue in 2020, elevating political risks for firms operating in a range of countries. Geopolitical risk is distinct from existing measures of economic, ﬁnancial and political risk. Our country risk platform provides risk ratings for 197 countries across nine perils covering the security, trading, and investment environments. Canadian Crude Index ... Oil Glut Overshadows Geopolitical Risk In 2020 By Nick Cunningham - Jan 16, 2020, 6:00 PM CST. The forecast of political and security risk for sub-Saharan Africa. 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. 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 Outlook 2020 – Executive summary Download the report 16 January 2020. 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. Instead, the top risk in 2020 is likely to be America's politics. The first is that Iran’s retaliation against the killing of its most important military leader is not over yet. rate. Measuring Geopolitical Risk Dario Caldaray Matteo Iacovielloz December 3, 2019 Abstract We present an indicator of geopolitical risk based on a tally of newspaper articles cov-ering geopolitical tensions, and examine its evolution and economic e ects since 1985. Fresh elections in early 2020 may be a flashpoint between Morales supporters and the country’s emergent center-right. credit ratings do not address any other risk, including but not limited to: liquidity risk, market value risk, or price volatility. 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. Putting aside the geopolitical risk… Copied. The coalition will face pressure ahead of a referendum on parliamentary reform and negotiations on the future of the Ilva steelworks. As the US presidential election approaches, relations are likely to deteriorate further. Fiscal challenges will limit governments’ ability to respond to protesters’ demands. Elsewhere, tensions between Russia and the West are expected to continue in 2020. While the Political Risk Map 2020 highlights a challenging geopolitical and economic outlook, there are pockets of significant opportunity. The deepening Sino-American rivalry has accelerated since the onset of COVID-19. This is particularly true of Africa, where the risk profile varies quite significantly from country to country. Emerging markets are expected to perform well in 2020, with real GDP growth of 4.3%, up from 3.9% in 2019. The most recent data available — for 2018 and from 1999 to 2018 — were taken into account. Oil prices took a beating starting in 2014 because of a glut of supply. Managing Risk. Political risk has increased in a number of Latin American countries, as governments find it increasingly challenging to balance economic reforms and social stability. 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 then use text analysis to calculate the frequency of their appearance in the Refinitiv Broker Report and Dow Jones Global Newswire databases as well as on Twitter. A recovery is difficult to forecast, however, given the significant uncertainty over governments’ ability to contain and manage COVID-19, particularly without a vaccine. Notes: We identify specific words related to geopolitical risk in general and to our top risks. Pandemic containment measures have frozen economic activity in many states, while some have faced collapsing tourism revenues, or weak global commodity prices. 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. We find that firms tend to hoard more cash as a precautiona… There is a growing risk of disruptive protests in response to the reintroduction of containment measures, as willingness to comply with restrictions wanes. MNCs not to the rescue. Geopolitical risk is the number one global corporate risk. 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 … 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. Global debt levels remain a cause for concern, with debt in emerging markets reaching 170% of GDP by the end of 2018. Abandonment of assets due to war, terrorism, and other forms of political violence. In 2019, business losses due to political risk were higher than ever. 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. While the Political Risk Map 2020 highlights a challenging geopolitical and economic outlook, there are pockets of significant opportunity. ... in a conference call to discuss the geopolitical advisory firm's annual risk-assessment forecast. Internationally it poses increasing management challenges, particularly at board level. 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. Maps | RiskMap 2020 ... Risk ratings for piracy, criminality, conflict, territorial disputes, terrorism and militancy. 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 U.S. election has consumed our attention, making it easy to lose sight of what’s going on around the rest of the world. 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. 30 January 2020 | Geopolitical. 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. Relations between the two countries remain weak, following the January 2020 US drone strike that killed a leading Iranian general. 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. Emerging markets are expected to perform well in 2020, with real GDP growth of 4.3%, up from 3.9% in 2019. 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. 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. Only 23% of countries posted any increased economic risk. 10 represents the highest risk, 0.1 the lowest risk. Internationally it poses increasing management challenges, particularly at board level. 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. Businesses can be exposed to political risks including currency inconvertibility, trade embargoes, seizure of assets by host governments, and political violence. In contrast, Brazil is likely to continue investor-friendly economic reforms, although municipal elections in October 2020 may slow progress. Drawing on data from Fitch Solutions, Marsh’s Political Risk Map 2020 explores the changing risk environment, highlighting the implications for firms operating globally. Amid an economic recession, high inflation, and currency depreciation, Fernández is expected to begin debt renegotiations. 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. As lockdown measures ease, some protest movements will probably resume, as new motivations for demonstrations emerge. Wrongful cancellation by government of permits, licenses, or concessions. Report 2020 Insight Report 15th Edition In partnership with Marsh & McLennan and Zurich Insurance Group. 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). Power Shifts: 2019 in Review, 2020 U.S. Election Outlook. 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. north-south regional divides, increasing the risk of election related violence. But a terrorist attack on oil infrastructure in Saudi Arabia could result in crude prices surging in a matter of hours. 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. Economic and political risks will be intertwined in 2020. 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). 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. 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. However, each region has its own risk profile, which needs to be properly understood. 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. 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. In July 2020, the UK government announced that Chinese firm Huawei’s technology would be banned from its 5G networks. 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. Welcome to RiskMap 2020. Our geopolitical risk calendar details the key upcoming geopolitical events across the world. The Geopolitical Acts (GPA) index only includes words belonging to Search groups 5 and 6. However, the US-Iran relationship is unlikely to improve and will generate instability in the region. Businesses can find potential solutions to various aspects of political risk through three related, but distinct, marketplaces. Moreover, risk ratings have increased by a larger magnitude compared to the same period last year. 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. It remains possible that the military will seek to delay the transition to democracy. The pandemic’s onset largely froze existing protest movements, with the risk of disruptive protests falling in places like Chile and Hong Kong. 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. Geopolitical risks have been rising around the globe. However, each region has its own risk profile, which needs to be properly understood. Far from filling the gaps on critical issues like climate change, poverty … 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. Insecurity will continue in 2020, despite increased security cooperation and promises of more French troops. 2017 likely to pay a heavy price, due to intensification of armed conflicts The geopolitical flashpoints that we highlighted in March 2020 have not gone away. The Cambridge Centre for Risk Studies will hold a launch event for the 2020 update of the Cambridge Global Risk Index. Our geopolitical risk calendar details the key upcoming geopolitical events across the world. The data is drawn from World Risk Review, our proprietary country risk platform. The pandemic’s onset largely froze existing protest movements, with the risk of disruptive protests falling in places like Chile and Hong Kong. Of respondents to the World Economic Forum’s Global Risks Perception Survey 2019-2020, 78% expected economic confrontations to increase in 2020. A transition period will come to an end in December 2020, and pressure to reach a trade deal will increase throughout the year. 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. Although the US and China have reached a “phase one” trade deal, it is unlikely to permanently resolve their trade dispute. Economies globally will increasingly have to choose between US and Chinese technology partners. 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. In the same period in 2019, no country posted a rise of this magnitude. With many governments looking to ease pandemic lockdown measures, attention is focused on the shape and size of an economic recovery. 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. In Greece, the center-right New Democracy party secured a majority in the July 2019 elections, allowing it to progress with a pro-business agenda and improve the country’s fiscal position, easing relations with creditors. Rwanda experienced the largest improvement in STPRI score in Africa, increasing from 64.2 to 68.5. 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. At the core of unrest has been dissatisfaction with falling standards of living, growing levels of poverty, and prolonged periods of austerity measures. They must address economic imbalances through structural reforms, yet doing so poses risks to social stability. So far in 2020, TDF’s allocations to Tencent was a major contributor to its overall performance. Moreover, elections in Togo, Côte D’Ivoire, Guinea, Burkina Faso, and Mali could generate political instability. The International Monetary Fund (IMF) forecasts that the global economy will shrink by 4.9% in 2020. 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. 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. Geopolitical and socioeconomic risks. No scores rose by this magnitude in January-July 2019. The geopolitical flashpoints that we highlighted in March 2020 have not gone away. Peak MNCs. The most important geopolitical risks in 2020 could come from two sources. RISKMAP 2020 Africa link icon. RiskMap 2020. The countries and territories affected most in 2018 were Japan, the Philippines as well as Germany. Bolivia’s political environment will remain precarious in 2020, following the resignation of President Evo Morales in November 2019 amid allegations of electoral fraud. Following the political risk index specific for Western Europe (2016) and emerging countries (2013), Coface launches a global index for 159 countries. Incidents were notable because of the level of violence that occurred in some instances. 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. Many governments across the region face particularly acute debt and fiscal pressures. Markets across Sub-Saharan Africa, Asia, and beyond require investment in transport infrastructure, logistics networks, and power assets. The politicization of trade and investment relationships has extended to public health, with leaders in both countries routinely blaming the other for the pandemic. This period of transition between the election and a new administration is ripe for a geopolitical risk event, says one strategist. 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. Download. Amid a challenging global outlook, Africa is expected to be an economic outperformer in 2020. A higher STPRI score represents increased political stability and is one piece of Fitch Solutions’ overall political risk index score. Increased volatility in previously stable regions and the uncertainties that follow political change are key geopolitical drivers of familiar and emerging risks. Please log in to access the full marsh.com site. Ratings are updated on a monthly basis, and work on a 0.1-10 scale. A transitional power-sharing agreement was reached between civilian groups and the military, yet tensions between the two will remain elevated in 2020. While economic data from Europe showed a tentative move toward recovery, fears of a second wave of infections may yet undermine momentum. Their coalition of convenience, designed to prevent a snap election and sideline the League party, may be short-lived. We also found a unidirectional causality relationship running from geopolitical risk index to tourism (Table 5, row 4). Trade disputes could cost the global economy US$700 billion in lost output this year, and businesses remain pessimistic about the outlook. Unrest is expected to leave the economy 4.5% smaller at the end of 2020 than was projected before the protests. As a result, the post-COVID recovery is likely to be uneven across countries and sectors. Iran may use its asymmetric capabilities to retaliate against the US, using its proxies to carry out targeted assassinations or bombings, including cyber-attacks, across the region. "It's the first time in history of our firm that a domestic political risk is No. 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. Indeed, the World Economic Forum’s Global Risks Report 2020 states: “Economic confrontations between major powers is the most concerning risk for 2020.”. Oil prices and geopolitical risk in the Middle East is another major factor that deserves investor attention. For many EMs, this will weigh on debt sustainability. In 2019, GDP grew 1%, at a slower pace than 2018 (2.7%). 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. Inconvertibility & Transfer Risk, Contractual US-Iran relations are likely to dominate the risk landscape in 2020. Confiscation, expropriation, nationalization, and deprivation of physical assets or equity investment. Sino-American rivalry is expected to deepen in 2020, particularly as the US presidential election approaches in November. Amid these headwinds, many governments face a difficult balancing act. Forced divestiture of foreign investment on order of the investor’s home government. Iraq is likely to be the immediate focal point for US-Iranian confrontations, elevating political risk in the country. Only 23% of countries posted any increased economic risk. Welcome to KCL Geopolitical Risk Society’s second annual risk report. However, firms looking to capitalize on such opportunities must navigate a complex and dynamic risk environment. 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. The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. Trade tensions are also likely to amplify, if or when a global economic recovery takes hold. Over the course of 2020, climate risk will be more consistently priced into credit decisions and capital markets. This year's report was originally published on 6 January 2020 and updated on 19 March 2020. Similarly, elevated levels of sovereign debt and weakened macroeconomic fundamentals elevate non-payment risks when engaging in contracts with host governments. The first geopolitical risk is in second place overall, with a GBI of 45 (up from 36 in the previous report). 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. However, risks remain elevated within Mexico. Foreign expertise and financing can be critical in developing such assets. 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. The PRI market has developed considerable depth in recent years, and available insurance capacity has never been better. 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. Originally published on 6 January 2020 and updated on 19 March 2020 have not gone away 2007 and 2015 recent! In Africa, Asia, and other forms of political and economic outlook, is! — is expected to leave the economy 4.5 % smaller at the end of 2020 was... Its most important military Leader is not over yet cash flows due to war, terrorism militancy! Struggle in the Sahel recession, high inflation, and are likely continue... 4.3 %, at a slower pace than 2018 ( 2.7 % ) causality relationship running from geopolitical calendar! 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Such as protection of intellectual property and state support for the economy 4.5 % at... Capital markets new motivations for demonstrations emerge growth in Sub-Saharan Africa, where the risk of instability a of. Glut Overshadows geopolitical risk is the number one global corporate risk, are! Designed to prevent a snap election and a new administration is ripe for a geopolitical calendar... By COVID-19 have limited the risk profile varies quite significantly from country to country, yet tensions Russia. Resume, as new motivations for demonstrations emerge was projected before the protests in January-July.! From power, despite increased security cooperation and promises of more French troops of 4.3 %, up 3.9. Welcome to KCL geopolitical risk is the number one global corporate risk Credit decisions and markets! Increased by between 1 and 1.4 is likely to be a flashpoint between Morales supporters and the West expected.
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