Political risk management survey

Willis Towers Watson and Oxford Analytica conducted structured interviews with executives at a cross-sector group of leading global firms with a strong track record in political risk management, to discover how leading companies are responding to recent tumultuous political events.

Many reported being blindsided. “Political risk in the US and Europe has been a big surprise and, in many ways, we were not prepared for it”, said one executive. Nearly 9 in 10 of the panellists reported that geopolitical risks had risen over the past five years, and 6 in 10 reported having experienced a financial loss from political risk.

  • The most frequently-mentioned geopolitical threat was US sanctions against Russia - a regional concern elevated to a global priority based on the possible implications for the US-Russia relationship.
  • In a dramatic sign of the changing times, the United States was named most frequently as the country or region where political risk is rising the most, ahead of the Middle East, Latin America, Venezuela, Sub-Saharan Africa and Russia.
  • The standoff between Saudi Arabia, other gulf states and Qatar, which one panellist from the energy sector termed an "Arab Cold War", was frequently named as a possible source of near-term political risk losses.
  • The inclusion of cyber-attacks - not a traditional type of political risk - as one of the key risks listed in the study highlights the increasing trend for cyber-attacks to have political origins.

Top concerns in managing geopolitical risk

The survey found that investors are increasingly holding management accountable for losses experienced due to political risk exposure. Importantly, growing investor pressure to account for political risk exposure is likely to mean that companies will increasingly be compelled to benchmark such capabilities against their peers.

Methodology

One-hour structured interviews were conducted with twenty panellists. The majority were Forbes Global 500 companies. The firms represented a cross section of industries including food and beverages, oil and gas, mining, pharmaceuticals, automobiles, and utilities. The companies are mainly headquartered in North America, Europe and Japan and have extensive global operations, including in “risky” countries. This is not intended to be a representative sample.

Top geopolitical threats