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US-China rivalry ranks as top political risk

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The tussle for global supremacy between the US and China looms as the biggest political risk next year, according to a Willis Towers Watson global survey of 41 major companies.

Populism and nationalism, the geopolitical situation in the Middle East and increased tensions between businesses and the public over environmental, social and governance (ESG) policies are also ranked as top threats to the global economy.

“It is clear from our survey that political risk continues to increase, and that related financial losses are on the rise,” Chairman of Financial Solutions Paul Davidson said.

“Corporations now face a strategic choice: to either maintain their global business models while accepting, mitigating or transferring the political risks associated with them, or attempting to realign themselves with the emerging shape of a new and apparently more nationalist global landscape.”

About 71% of respondents say management is putting more emphasis on political risk management, and almost 40% feel investors are expecting more action be taken to address the issue.

“Political risks are now a defining feature of the modern age, and something every risk manager, CFO and CEO need to be aware of, understand and grapple with,” MD Financial Solutions Asia Pacific Stuart Ashworth said.

“With populism and protectionism on the march [and] instability, conflict and public disorder on the rise, companies need to remain vigilant and seek assistance where they can to better understand the changing risk landscape, identify the risks they face, quantify their exposures and where possible mitigate those risks.”