Dealing with political risks

By: Lynn Harrod, Head of Political Risks Insurance, Marsh Africa

Providing political risk solutions presents risk providers with an opportunity for creating frameworks to respond and to steady political risk environments particularly in emerging economies. Political circumstances can change quickly. Social instability and adverse government actions are among the most common examples of political risks that companies and financial institutions face when trading with or investing in certain countries.

In seeking to manage political risks in a global economy, many companies pursuing wider opportunities are expanding beyond their borders to do business internationally. However, unstable political environments can quickly ruin best-laid business plans.

Marsh has a political risks area specifically structured to assist clients with their specific risks.

The core building blocks to cementing such a unique position in the political risk landscape are being able to provide unmatched expertise, enough capacity, bespoke policy models as well as having insights into each country’s political risk arena and landscape.

Foundations towards building expertise within an ever changing environment such as the political risk landscape requires a dedicated and strategic relationship management model and sophisticated risk management resources and solutions that can aid risk practitioners to anticipate, understand and respond to changes in the overall political landscape.

Political risk handling remains therefore a highly specialised field and risk practitioners need to be specialised enough in their capacity and expertise to know of pivotal developments in a country’s political landscape. For example, the promulgation of legislation. Changes such as these potentially threaten and impact a country’s economic environment which in turn could influence investor appetite and risk perception of doing business in a specific region or country.

Marsh together with BMI, have produced the 2017 Marsh Political Risks Map. The 2017 Marsh Political Risk Map incorporates key findings from the Country Risk Index (CRI) which serve as a significant reference point. The CRI incorporated in the 2017 Marsh Political Risk Map is an interactive tool that provides important information on global political risks.

As the geopolitical landscape becomes increasingly uncertain, multinational organisations and financial institutions have elevated their awareness of the inherent challenges faced when conducting business in areas of concern. For this reason, Marsh leads the conversation in providing expertise, bespoke risk solutions and an unparalleled capacity in terms of helping clients negotiate a cost effective and bespoke policy to cover the risks they face and safeguard them.