
Political Risk in a Disrupted Global Landscape
February 20, 2017
Support for populism and protectionism is becoming a major movement in nations around the world. In the United States, the new administration is widely expected to change foreign policy, which will in turn create a ripple effect on political risks and trade credit globally.The Eurasia Group, a leading political risk research and consulting firm, cites "independent America" as a top risk for global stability and warns that 2017 will see a "geopolitical recession" that marks "the most volatile political environment in the postwar period, at least as important to global markets as the economic recession of 2008." Among the other top risks for the year, Eurasia Group sees destabilization in Asia, weakening of U.S. allies in Europe and a failure of structural reforms in emerging economies.That is a startling assessment indeed. The overarching theme is greater uncertainty. It simply is not yet clear how markets will respond to changes in U.S. foreign policy and reshape the global political risk landscape. The less certain things are, the more important it will be for international businesses to consider their options for mitigating political risk and protecting the value of their contracts with foreign suppliers.
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