Managing political risk in advanced economies

Abstract:

Research in political psychology suggests that people who are angry at political conditions tend towards greater political participation and to disregard economic consequences of their choices. These characteristics can be found in voting outcomes associated with the wave of popular discontent sweeping North America and Europe. If this discontent is indeed related to inequality, as many presume, political risks in advanced economies could escalate significantly in the years ahead. Banks can address these risks by augmenting the political expertise of country risk teams, addressing political risks operationally and responding to rising risk as citizens.

Keywords:

country risk, political risk, sovereign risk, populism, inequality, financial crises

Sam Wilkin serves as a senior advisor to Oxford Economics, one of the world’s leading economic forecasting firms, and also to Oxford Analytica, a strategic and geopolitical analysis consultancy that counts among its clients more than 25 world governments. He is the editor of Country and Political Risk: Practical Insights for Global Finance, Volume I (2004) and Volume II (2015).