Magnitude of global political risk increases: Aon

The overall level of global political risk decreased in 2006, but the magnitude and complexity of risks facing companies around the world has increased, according to Aon’s Political & Economic Risk Map.

The risk map surveyed 214 countries; of these, 15 countries posed less of a risk in 2007 compared to 2006, marking the first decrease in the overall level of global political risk in three years.

The survey also found that companies’ greater reliance on overseas sourced goods, with increasingly tighter ‘just-in-time’ production demands, means companies’ global supply chains are under threat from political and non-political trade disruption risks such as embargoes and pandemics.

“The magnitude and complexity of risk is increasing for companies around the world,” said Bryan Squibb, Aon U.S. trade credit national managing director. “In addition, the same companies are facing increased scrutiny both internally and externally.”

Corporate governance and reputational risks have become severe, says Squibb. The risk map shows general political risks, taking into account specific risks such as: strike, riot, terrorism and war risks; sovereign default risk; economic and credit risk; supply chain vulnerability; legal and regulatory risk and political interference; and exchange transfer problems.