Growth opportunities for those managing political risk

23 August 2018

Since the fall of the Berlin Wall in 1989, political risk has largely played out at a local or regional level.

However, an emboldened and assertive Russia, together with the current US-China trade dispute and a more challenging US administration, indicates that the geopolitical environment presents a significant dimension to the already heightened risk environment.

These issues have led to a notably less certain trade and investment environment than at any time since the Cold War.

Yet, the underlying opportunity for growth in trade and investment is as high as it has ever been.

Volatility presents potential for elevated returns for those organisations that invest in managing political risk.

Higher levels of geopolitical risk have also contributed to increased macroeconomic risks, including the uncertain commodity price environment and tightening monetary policy.

This has elevated the credit risk environment and changes in credit risk conditions provide potential for agile and resourceful companies to seize new opportunities to grow.

These growth opportunities are underlined by the fact that, as the newscasters continue to present a steady stream of woe, the world economy is growing at its fastest pace since 2011.

Risk management strategies

It is key to understand the country and credit risk environment and build robust risk management strategies to expand securely within it.

JLT specialises in understanding and advising on credit, political and security (CPS) risks.

We have built dynamic tools for understanding country risk (the World Risk Review) and work closely with our clients to identify and define CPS risks, so that we can deliver effective insurance solutions.

The work we have done is varied, ranging from securing investment in power generation in Rwanda, to mobilising tens of billions of dollars of new lending through reduction of bank reserves, increasing electronic goods trade volumes in the US and negotiating the extraction of key people detained in difficult environments.

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For more information contact Nick Robson, Credit, Political & Security Risk Global Specialty Head on +44 20 7558 3643 or email nick_robson@jltgroup.com.

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