Aon Political Risk Map shows reduced risks in some emerging markets

As the world is attempting to recover from the 2008 financial crisis and volatility in several regions, the latest Aon Political Risk Map shows more countries’ risk ratings have declined than in previous years, the company noted Tuesday.

On the 2013 interactive map, 13 countries have shown decreased risk from last year, while in 2012, only three countries decreased their risk, Aon said. In addition, only 12 countries have an increased risk, as opposed to 21 last year.

The map, developed in part by Roubini Global Economics, identifies risk exposure worldwide, assessing exchange transfer, legal and regulatory risk, political interference, political violence, sovereign non-payment, and supply chain disruption.

This year, for the first time,  the map also measures banking sector vulnerability, risk to fiscal stimulus and risk of doing business.

As well as being given an overall rating, for every category, each country is given a risk rating of low, medium-low, medium, medium-high, high or very high.

The map data is updated quarterly as well as following significant political risk events, Aon said.

Three Middle Eastern countries – Bahrain, Oman and the United Arab Emirates – were upgraded this year, Aon noted.

“While this might be temporary, as the region is still fragile, this crystallizes a divergence in the region between the countries with stronger economic and financial institutions and those with greater wealth which increases their resilience to adverse political and economic events,” the company stated.

“Moreover, it underscores the importance of strong corporate and financial institutions, which cushion the effects on individual countries.”

Regime changes have led to destabilization in North Africa, where several countries were downgraded or remain high risk, Aon noted. Developments in the first few months of this year have also indicated potential for further downgrades in the area, Aon said.

Aon will also soon release a terrorism risk map for 2013, according to its website.