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Analysis

Where Political Risks Are Growing

The Marsh 2022 “Political Risk Report” indicates areas—both geographical and by economic or political risk factor—in which companies need to be paying more attention to their potential exposures.

By T&R Staff | May 24, 2022 at 03:58 PM
Stock illustration: Global gears working together

Earlier this month, Marsh Specialty released its “Political Risk Report 2022.” Not surprisingly, the area of risk that experienced the most growth is war and civil war—although for most of the world, the probability of such an event remains low.

Marsh generates its geopolitical risk ratings using a proprietary, algorithm-based modeling system that incorporates more than 200 international indices across 197 countries. The model scores each risk on a scale of 0.1 to 10.0, where 0.1 indicates the lowest possible risk and 10.0 the highest.

The world’s most prevalent political risks in 2022, according to Marsh’s model, are strikes, riots, and civil commotion, followed by terrorism and contractual agreement repudiation. For the United States, the model gave the risk of strikes, riots, and civil commotion a score of 5.0, terrorism a score of 4.4, and contractual agreement repudiation a score of 4.1. Meanwhile, war and civil war and country economic risk both rated 3.0. Sovereign credit risk (1.0), expropriation (1.1), and currency inconvertibility and transfer risk (1.4) received the lowest risk ratings for U.S. businesses.

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