Welcome

by Christophe Meurier, Global Head of Financial Solutions Willis Towers Watson

Keeping our clients informed by analysing patterns in the world’s most vulnerable countries

Summer Edition 2021

Welcome to a significantly updated version of the Political Risk Index, which I hope you find interesting and valuable.

A striking trend of recent years has been the emergence of political risk in low risk areas. The recent turmoil in Hong Kong and Chile are two examples. The Index has consistently analysed patterns in the worlds most vulnerable countries, but sometimes we have found ourselves short of coverage in places where our clients had sudden and unexpected political risk concerns.

With this in mind the most significant change in the Index is an expansion of the number of countries and territories covered, rising from 40 to 61. We hope the more than 50% increase in countries and territories covered will advance our coverage(although cannot predict every location where political instability could occur.)

Christophe Meurier

Chief Executive Officer,
Financial Solutions
Willis Towers Watson

The second change is more subtle. Whilst the political risk ratings use the same risk temperature scale they are now based on our Value at Political Risk analytics tool, which is calibrated against historical political risk claims and losses. You will notice a decrease in some risk ratings associated with infrequent but catastrophic political risk events (such as expropriation), but an increase elsewhere (in some currency inconvertibility ratings, for instance). We have updated the historical ratings to the new method as well. Overall the ratings should now reflect a more like for-like comparison of event frequency.

One final note: although the ratings are updated quarterly, this Index will now be published twice per year. For those in-between index publication periods, please sign up for our Financial Solutions Political Risk Update, which tracks political risk events each week (details of which you will find at the end of this document). I look forward to hearing your thoughts on these changes and on the Political Risk Index as a whole.

Both this Political Risk Index and the Financial Solutions Political Risk Update are produced in partnership with Oxford Analytica (OA). We thank OA for their longstanding collaboration in delivering these reports.

Yours Sincerely,