A survey of 41 major corporations by Willis Towers Watson found that 61% believe political risk levels increased in 2019.
Disruption of international trade was considered the most significant risk in the majority of regions, the annual Political Risk Survey found, WTW said, adding that 70% of the respondents cited trade sanctions as a concern for their operations in Asia Pacific, 58% in Europe, while for Russia and The Commonwealth of Independent States (CIS), the figure was 77%.
Sanctions against Russia, Iran and Venezuela, a trade war involving China, and the threat of Brexit in Europe were reported as concerns by respondents, the firm noted.
According to the research, 2019 also saw an increase in the proportion of companies reporting that they had experienced political risk losses, WTW said.
Survey highlights
More than two-thirds (68%) of them had experienced a political risk loss including the following types:
• 54% of respondents had experienced a loss due to political violence, compared to 48% in 2018;
• 46% reported losses due to trade sanctions or import / export embargoes in 2019, compared to 2018’s figure of 40%;
• 32% of companies with revenues exceeding $1bn reported previous experience of a catastrophic (more than $250 million) political risk loss.
Most respondents (71%) stated that the emphasis on political risk management at their company had increased since 2018, and nearly 40% felt that they were facing more pressure from investors regarding political risk management, according to WTW.
