Elevated political risk levels likely to continue as a result of the economy: Aon

Political and financial instability remain a feature of the business landscape as a result of the recession, Aon Risk Services reports.
The company believes elevated political risk levels will continue before an overall tendency for improving global business conditions becomes established.
“For many companies and across different sectors, including credit and political risk insurance, the business environment remains uncertain when trading with or investing in politically or economically unstable countries,” Miles Johnstone, director of Aon’s political risk team, concluded.
Aon’s 2010 political risk map, released Jan. 27, includes new indices that look at food, agricultural commodity and water supplies.
“Rising risk levels in 2009 have led to a significant volume of credit and political risk claims in international insurance markets, which is driving many of the 18 downgrades in this year’s map,” Johnstone says. “For instance, non-payment of sovereign and sub-sovereign debt obligations is a major issue for underwriters insuring risks in Ghana, and underwriters continue to experience a multitude of claims stemming from payment defaults by private sector banks in Ukraine.”
Nine countries have been upgraded to a lower risk level and 18 countries have seen conditions worsen, leading to a downgrade. Three countries have been added to the very high category list.