Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • September 2018
09

Political risks increasingly costly for global businesses

Open-access content Monday 24th September 2018 — updated 5.50pm, Wednesday 29th April 2020

Geopolitical tensions have become a “reoccurring and material cost” for businesses worldwide, with the majority of large organisations experiencing losses of at least $100m (£76m) as a result.

2


That is according to research by Willis Towers Watson (WLTW), which reveals that exchange transfers are the most frequent political risk for firms with revenues greater than $1bn.

Approximately 55% have had at least one political risk loss exceeding $100m, while more than 80% have scaled back on investments in a country as a result of their concerns.

US sanctions, emerging market crises, protectionism, trade wars, populism and nationalism were cited as the key threats, with Russia and Vietnam the countries where most losses occur.

WLTW Financial Solutions CEO, Paul Davidson, said companies would increasingly need to monitor, quantify and manage these risks, as well as develop strategies to mitigate them.

"Political risk has increased significantly, now becoming a reoccurring and material cost of doing business," he continued.

"If these levels remain elevated, companies will fall under increasing pressure from shareholders for greater levels of transparency around the losses actually incurred."  

The research involved a survey of 40 leading businesses, the majority of which were Forbes Global 500 companies.

Nearly 60% had experienced losses from exchange transfers - the most frequently reported risk, followed by political violence on 48%, and import or export embargoes on 40%.

Three-fifths said political risks had increased since last year, with the largest companies most likely to have avoided or scaled back investments as a result.

Simon Coote, deputy director at Oxford Analyica, which co-produced the research, said political risk could no longer be excluded from executive decision-making.

"Taking steps to manage political risk must become a requirement of doing business, not simply regarded as an inevitable cost of operating in challenging environments," he added. 


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our September 2018 issue of The Actuary.
Click here to view this issue
Filed in
09

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Deputy Head of Capital Modelling

London (Central)
£110000 - £130000 per annum
Reference
144789

Head of Analytics (Actuarial)

London (Central)
£130000 - £165000 per annum
Reference
144788

Pensions Actuarial Analyst - GMP Equalisation

London (Central)
£ dependent upon experience
Reference
143745
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ