Falling Oil Prices Could Rock Third World Boats: Marsh’s 2015 Political Risk Map

Map rates 185 countries on political, macroeconomic and operational risk

Geopolitical problems and falling commodity prices present challenges for foreign investors, says Marsh’s 2015 Political Risk Map and report. Based on data from Business Monitor International (BMI), the map rates 185 countries on political, macroeconomic and operational risk.

The report’s key findings include falling crude oil prices will likely benefit oil-importing countries and the global economy as a whole, but could negatively impact oil exporters. BMI lists Angola, Chad, Equatorial Guinea, Iran and Venezuela as being at severe risk for deteriorating political profiles should prices continue to fall.

BMI also reports that like last year’s political violence in the Middle East, North Africa, Ukraine and Thailand, other countries may face mass protests and political unrest in 2015. Frustration over economic mismanagement and a single leader holding power for decades could lead to severe problems in Benin, Cameroon, Democratic Republic of Congo, Sri Lanka and Venezuela. Inspired by Scotland’s 2014 referendum, separatist movements in Spain and Bosnia and Herzegovina could ramp up their efforts and create more political uncertainty.

Another contributing factor to global instability is the perception that the U.S. won’t strongly interfere in international crises, BMI says. At the same time, there are more and more powerful countries acting on the world stage, and their interests don’t always line up.

“If these countries are emboldened by the perceived weakness of the United States, that could lead to more conflict,” says BMI head of global political and security risk Yoel Sano.

Events in 2014 demonstrate how quickly political and economic concerns can develop into crises, even in traditionally stable countries.

“For risk managers, the message is simple: Be prepared for anything, including in countries previously considered above reproach,” says Marsh’s global credit and political risk practice leader Evan Freely.

In addition to purchasing insurance, the report suggests, businesses should evaluate the impact of potential political risk events to their operations, staff, customers and suppliers.

These trends may affect international elections scheduled for 2017. In addition to a new U.S. president taking office, the year will see elections in the France, Germany, China, Iran and South Korea.

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