Political Risk Map 2015: Geopolitical Tensions and Falling Oil Prices Challenge Foreign Investors

Several strategies can be used to manage growing political risks, especially in light of upcoming elections that could further alter the geopolitical landscape.

The events of the last 12 months demonstrate how quickly political and economic concerns can develop into large-scale crises, including in historically stable countries, and how long-term political dynamics can shift almost overnight.

Geopolitical tensions, falling commodity prices, separatist movements, and more are shaping today’s political risk landscape. There is a clear divide between healthy emerging markets and those that represent poor investments for foreign investors, according to the Marsh Political Risk Map 2015.

Drawing on data from Business Monitor International (BMI), a leading source of independent political and credit risk analysis, the map includes overall risk scores for 185 countries based on three categories: political risk, macroeconomic risk, and operational risk.

The report details several of the major factors that drove the political risk environment in 2014 as well as those that will likely continue into 2015, including:

• Falling oil prices.
• Divergence among emerging economies that represent strong investment opportunities versus those that do not.
• Political violence beyond the Middle East and North Africa.
• Autonomy and separatist movements.
• Greater global conflict.
• Social media
• State-sponsored cyber-attacks.

The report recommends strategies for managing political risks and also looks beyond the next couple of years to consider 2017, when elections in several countries could significantly alter the political risk landscape.