February 3, 2003 by Canadian Underwriter
Both economic and political turmoil worldwide make some countries a bad investment risk, says a new report from international broker Aon Corp. In introducing its Global Credit and Political Risk Map, Aon Trade Credit notes that Latin America and the Middle East have become poor risks, while Russia has improved its profile and become a top investment destination.
Overall, 2002 saw billions of dollars in financial losses for foreign businesses, investors and lenders as a result of credit and political risks.
“Recent political and economic crises around the world reinforce the importance of monitoring and managing political risks,” says Bryan Squibb, managing director of Aon Trade Credit. “From the political crises in Argentina and Venezuela to the potential war in the Middle East, companies need to understand the risks of conducting business in volatile environments.”
Argentina has increased its risk profile, with Aon predicting credit and political risks could lead to a half-billion in losses. Similarly, the Middle East has become a trouble zone for U.S. businesses, as potential boycotts and threats of violence against facilities and personnel could lead to commercial losses. And some countries remain relatively stable despite volatile conditions surrounding them, including Costa Rica, Chile and Botswana.