While most of the insurance risk headlines center around natural disasters, political risks can often have equally damaging effects on the sector.
According to Aon Risk Solution’s latest Political Risk Map which was released on Wednesday, the political tension coming from the ‘Arab Spring’ remains a key concern for companies with operations in the area.
The company performed a survey of 167 countries and territories measuring the risk level of exchange transfer, sovereign non-payment, political interference, supply chain disruption, legal and regulatory, and political violence.
If found that the countries recently involved in the ‘Arab Spring’ had the highest amount of risk.
“These uprisings and protests remain a key concern in 2012 and we see this reflected in rating downgrades of several countries,” said Roger Schwartz, senior vice president of political risk for Aon Risk Solutions’ Crisis Management Practice.
“This is forcing CEOs and CFOs of businesses with overseas operations in emerging markets to revisit risk management and risk mitigation measures.”
The other key political risk outlined in the report was the upcoming elections in the US, France, Russia and China will also potentially contribute to greater global uncertainty.
The eurozone debt crisis was another significant risk.
According to Aon, the risk map “provides an indication of overall levels and types of political risk, which relates to the actions or inactions of foreign governments, including third-party countries which may deprive a business of its assets, prevent or restrict the performance of a contract and affect repayment of loans to financing banks.”
Each country is given a rating according to the different types of risk it faces. In this years report there were three countries which had lower risk than last year, but 21 who’s risk rating had increased.
