Businesses will be caught up in this rivalry, as the two countries politicize trade and investment relationships. National lockdowns, curfews, and the health risks posed by COVID-19 have limited the risk of civil unrest in recent months. 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. But a terrorist attack on oil infrastructure in Saudi Arabia could result in crude prices surging in a matter of hours. 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]. This study investigates whether geopolitical risks influence Chinese firms' cash holdings. Of respondents to the World Economic Forum’s Global Risks Perception Survey 2019-2020, 78% expected economic confrontations to increase in 2020. 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. Emergence of competing trade blocs. 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. Over the course of 2020, climate risk will be more consistently priced into credit decisions and capital markets. 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. It remains possible that the military will seek to delay the transition to democracy. 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. 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. Our country risk platform provides risk ratings for 197 countries across nine perils covering the security, trading, and investment environments. Managing Risk. As a result, the post-COVID recovery is likely to be uneven across countries and sectors. The election may also see deep fake media adding to the risks. Global debt levels remain a cause for concern, with debt in emerging markets reaching 170% of GDP by the end of 2018. Both countries have approved the US-Mexico-Canada Agreement, NAFTA’s successor. RiskMap is the leading annual forecast of political and security risk, compiled by Control Risk experts worldwide. As lockdown measures ease, some protest movements will probably resume, as new motivations for demonstrations emerge. 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. 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. Political risks are also rising in India. Geopolitical risk is the number one global corporate risk. Agreement Repudiation. 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. image expand icon. In the same period in 2019, no country posted a rise of this magnitude. Businesses can find potential solutions to various aspects of political risk through three related, but distinct, marketplaces. 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. At the same time, resilience to economic shocks is likely to be reduced in 2020. Conflicts grew by +100% between 2007 and 2015. Iran’s economy will also struggle in the face of stringent US sanctions, spurring protests. A transitional power-sharing agreement was reached between civilian groups and the military, yet tensions between the two will remain elevated in 2020. Oil prices and geopolitical risk in the Middle East is another major factor that deserves investor attention. This year's report was originally published on 6 January 2020 and updated on 19 March 2020. 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. 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. The pandemic’s onset largely froze existing protest movements, with the risk of disruptive protests falling in places like Chile and Hong Kong. [eu1, prod, s7connect, crx3, nosamplecontent, publish, crx3tar], Private Equity and Mergers & Acquisitions. However, downside risks stem from the continent’s rising sovereign debt load. Abandonment of assets due to war, terrorism, and other forms of political violence. While economic data from Europe showed a tentative move toward recovery, fears of a second wave of infections may yet undermine momentum. We also found a unidirectional causality relationship running from geopolitical risk index to tourism (Table 5, row 4). However, the US-Iran relationship is unlikely to improve and will generate instability in the region. Relations between the two countries remain weak, following the January 2020 US drone strike that killed a leading Iranian general. Economic and political risks will be intertwined in 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. zoom in. 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. US politics in 2020 will focus on the November 2020 presidential election, which will likely reflect a highly polarized electorate. This is particularly true of Africa, where the risk profile varies quite significantly from country to country. Managing Director, US & Canada Credit Specialties Practice Leader, US Practice Leader, Political Risk & Structured Credit | Credit Specialties. A permanent resolution is unlikely in 2020, however. In the first half of 2020, one-third of Moody’s sovereign ratings actions related to COVID-19, and all downgraded sovereigns were EMs. 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. The first is that Iran’s retaliation against the killing of its most important military leader is not over yet. 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. Confiscation, expropriation, nationalization, and deprivation of physical assets or equity investment. Indeed, the World Economic Forum’s Global Risks Report 2020 states: “Economic confrontations between major powers is the most concerning risk for 2020.”. Amid a challenging global outlook, Africa is expected to be an economic outperformer in 2020. For many EMs, this will weigh on debt sustainability. 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. 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. How has the Geopolitical Risk Factor performed? In Côte D’Ivoire’s October 2020 general election, candidates have already invoked. 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. RISKMAP 2020 Africa link icon. Issues related to global trade will continue, resulting in persistent political and economic uncertainty for businesses. This year's report was originally published on 6 January 2020 and updated on 19 March 2020. Intra- and Inter-State Conflict Conflict itself will continue to be a key geopolitical risk in 2020. 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. This reflects President Paul Kagame’s dominant political position and policy stability, which supports continued economic growth and a stable business environment. 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. The two countries account for more than 40% of global GDP. Elsewhere, tensions between Russia and the West are expected to continue in 2020. 10 represents the highest risk, 0.1 the lowest risk. Geopolitical risk is distinct from existing measures of economic, financial and political risk. 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. 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. Only 23% of countries posted any increased economic risk. 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. Divisions within the ruling African National Congress are also likely to weigh on reform momentum. Geopolitics will dominate the risk environment in the Middle East. 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. 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. In 2019, deaths in the region due to armed conflict reached their highest figure since 2012, as armed groups took advantage of porous borders and weak regional institutions. 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). The data is drawn from World Risk Review, our proprietary country risk platform. 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. 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 two countries are likely to remain strategically opposed on issues such as protection of intellectual property and state support for certain industries. Insecurity will continue in 2020, despite increased security cooperation and promises of more French troops. Those perceived to have failed to effectively manage the pandemic could face anti-government protests, increasing the risk of instability. Following the political risk index specific for Western Europe (2016) and emerging countries (2013), Coface launches a global index for 159 countries. 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. Trade disputes could cost the global economy US$700 billion in lost output this year, and businesses remain pessimistic about the outlook. Sino-American rivalry is expected to deepen in 2020, particularly as the US presidential election approaches in November. Unrest is expected to leave the economy 4.5% smaller at the end of 2020 than was projected before the protests. The drivers of increased trade protectionism remain in place, and are likely to be exacerbated by deteriorating US-China relations during the pandemic. The Geopolitical Acts (GPA) index only includes words belonging to Search groups 5 and 6. 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. 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). President Andrés Manuel López Obrador displayed economic pragmatism in 2019, but headwinds may push him towards increasingly populist policies in 2020. 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. Political Risk Outlook 2020 – Executive summary Download the report 16 January 2020. 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. 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 RISKMAP 2020 Maritime. Recent weeks have exposed these challenges. With many governments looking to ease pandemic lockdown measures, attention is focused on the shape and size of an economic recovery. A transition period will come to an end in December 2020, and pressure to reach a trade deal will increase throughout the year. We see geopolitical risk as a material market factor. This period of transition between the election and a new administration is ripe for a geopolitical risk event, says one strategist. 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. 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. The International Monetary Fund forecasts growth in Sub-Saharan Africa to accelerate to 3.5% in 2020/21, up from 3.3% in 2019. 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. Emerging markets are expected to perform well in 2020, with real GDP growth of 4.3%, up from 3.9% in 2019. 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 pandemic’s onset largely froze existing protest movements, with the risk of disruptive protests falling in places like Chile and Hong Kong. The International Monetary Fund (IMF) forecasts that the global economy will shrink by 4.9% in 2020. Sudan posted the most significant global deterioration in STPRI score, falling to 21.7 from 36.3. Pandemic containment measures have frozen economic activity in many states, while some have faced collapsing tourism revenues, or weak global commodity prices. Geopolitical risks have been rising around the globe. Welcome to KCL Geopolitical Risk Society’s second annual risk report. Export/import restrictions, causing losses on trade transactions. The forecast of political and security risk for sub-Saharan Africa. 100%. 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. 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 World Bank forecasts global growth of 2.5% in 2020, a small rebound from 2019’s 2.4% estimate. So far in 2020, TDF’s allocations to Tencent was a major contributor to its overall performance. All risk ratings referenced in this report were produced by Marsh JLT Specialty’s World Risk Review. However, risks remain elevated within Mexico. The pandemic’s economic and social impacts are driving significant shifts in global political risk — introducing new dynamics and accelerating existing geopolitical megatrends, such as trade protectionism and the transition to a multipolar world order. The Cambridge Centre for Risk Studies will hold a launch event for the 2020 update of the Cambridge Global Risk Index. Energy companies will continue to be forced to reevaluate future investment as policy shifts and judicial challenges begin to affect reliance on traditional hydrocarbon plants to generate electricity, especially in Europe. There is a growing risk of disruptive protests in response to the reintroduction of containment measures, as willingness to comply with restrictions wanes. Contract frustration or cancellation due to default by government, or other government acts. 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. 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. 2017 likely to pay a heavy price, due to intensification of armed conflicts 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 Caldara and Iacoviello use the same methodology to construct a Geopolitical Risk Historical Index (GPRH), which uses three newspapers and starts in 1899. 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 ... 2020, from $4.056 trillion on January 7, 2019. 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. 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. Wrongful cancellation by government of permits, licenses, or concessions. Emerging markets are expected to perform well in 2020, with real GDP growth of 4.3%, up from 3.9% in 2019. ... in a conference call to discuss the geopolitical advisory firm's annual risk-assessment forecast. US-Iran relations are likely to dominate the risk landscape in 2020. While the Political Risk Map 2020 highlights a challenging geopolitical and economic outlook, there are pockets of significant opportunity. Incidents were notable because of the level of violence that occurred in some instances. Markets across Sub-Saharan Africa, Asia, and beyond require investment in transport infrastructure, logistics networks, and power assets. The index is then normalized to average a value of 100 in the 2000-2009 decade. Regulatory changes may look to increase government royalties, potentially weakening operating environments. 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. This update to the Political Risk Map 2020 draws upon data from the Marsh JLT Specialty’s World Risk Review platform. 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. The PRI market has developed considerable depth in recent years, and available insurance capacity has never been better. Report 2020 Insight Report 15th Edition In partnership with Marsh & McLennan and Zurich Insurance Group. 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.). They are also the world’s top two emitters of greenhouse gases. Following the UK’s departure from the EU on January 31, focus will shift to negotiations over its future relationship with Europe. Bolivia’s political environment will remain precarious in 2020, following the resignation of President Evo Morales in November 2019 amid allegations of electoral fraud. Fresh elections in early 2020 may be a flashpoint between Morales supporters and the country’s emergent center-right. The countries and territories affected most in 2018 were Japan, the Philippines as well as Germany. 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. 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. The most important geopolitical risks in 2020 could come from two sources. In contrast, Brazil is likely to continue investor-friendly economic reforms, although municipal elections in October 2020 may slow progress. There is a growing risk of disruptive protests in response to the reintroduction of containment measures, as willingness to comply with restrictions wanes. 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. In 2019, GDP grew 1%, at a slower pace than 2018 (2.7%). We see geopolitical risk as a material market factor. 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. The first geopolitical risk is in second place overall, with a GBI of 45 (up from 36 in the previous report). Our geopolitical risk calendar details the key upcoming geopolitical events across the world. 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. The transition toward a multipolar world order seen in 2019 — with multiple challenges to multilateralism and free trade — is expected to continue. Research Report Climate-Related Financial Disclosure in the Canadian Financial Sector. Progress on denuclearization on the Korean peninsula will be slow as US-North Korean relations have reached an impasse, following a rapprochement in 2018. 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. Instead, the top risk in 2020 is likely to be America's politics.
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