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2013 Political Risk Map
March 2013
Aon Risk Solutions Global Broking Centre | Crisis Management
2013 Political Risk Map
History and general overview:
Leading the industry for 15 years
Aon Risk Solutions Global Broking Centre | Crisis Management
Interactive Map
About the 2013 Aon Political Risk Map
Aon partnered with Roubini Global Economics (RGE), an independent, global
research firm founded in 2004 by renowned economist Nouriel Roubini, to
produce the 2013 Political Risk Map in order to take advantage of RGE’s
unique methodology, Quantitative Country Analytics (QCA), for systematically
analysing political risk around the world.
Aon political risk map is unique as it now follows a 3 layered approach in
analysing political risk in emerging countries (excluding EU and OECD
countries). Country ratings reflect a combination of:
• analysis by Aon Risk Solutions
• analysis by Roubini Global Economics
• the opinions of 20+ Lloyd's syndicates and corporate insurers actively writing
political risk insurance.
QCA as applied to the map allows clients:
• to track changes in countries, systematically
• obtain more meaningful country comparisons and, most importantly
• an ability to decompose each country’s risk to show the various elements that
drive that risk.
2 Aon Risk Solutions | Global Broking Centre | Crisis Management
The Interactive Political Risk Map
2013 is the 15th anniversary of the Political Risk Map and to celebrate, we
have created a fully interactive web based map, to compliment the annual print
version.
The Interactive Map facilitates access to historical and current data as well as
analytics.
3 Aon Risk Solutions | Global Broking Centre | Crisis Management
The Interactive Political Risk Map
Historical Data
The Interactive Map collates 15 years of political risk map data and generates
90 different maps which can show:
• country ratings – changes over time
• risk Icons – changes to and comparative ratings that apply to each country
• a map for each year from a risk Icon perspective
PDF versions –access to each PDF version of the map from 1998 to 2013
4 Aon Risk Solutions | Global Broking Centre | Crisis Management
The Interactive Political Risk Map
Current Data
Risk Icon rankings – every country has all nine risk Icons and these are
graded from Low to Very High
Country summaries – each country has a country summary (from 2010 on)
Quarterly updates - a key feature of the Interactive Map is that it will be
updated quarterly and instantly at the time a key political event
5 Aon Risk Solutions | Global Broking Centre | Crisis Management
The Interactive Political Risk Map
Map analytics - in addition to the current and historical map features, clients
have the ability to track their portfolios of country risk over time.
Map analytics allow clients to analyse a country historically and can compare
different countries against each other over time and with respect to different risk
Icons.
For this Aon has created two analytical tools for:
Country & risk Icon analysis
Exposure analysis
6 Aon Risk Solutions | Global Broking Centre | Crisis Management
The Interactive Political Risk Map - Map Analysis
Map Analysis helps
clients analyse a
country historically and
can compare different
countries against each
other over time and
with respect to different
risk Icons.
7 Aon Risk Solutions | Global Broking Centre | Crisis Management
The Interactive Political Risk Map - Exposure Calculator
Exposure Calculator
allows client to enter their
financial exposures
against each country in
the portfolio of countries
in which they operate. It
also demonstrates current
and historic risk changes
by value.
8 Aon Risk Solutions | Global Broking Centre | Crisis Management
2013 Political Risk Map
What is new in 2013?
Aon Risk Solutions Global Broking Centre | Crisis Management
Print version
2013 Political Risk Map
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11
Rating methodology
Country colours
• Risk rating using the three layered
approach
Six core risk Icons for country ratings
• Exchange Transfer
• Sovereign Non-Payment
• Political Interference
• Supply Chain Disruption
• Legal & Regulatory Risk
• Political Violence
Additional risk Icons – for interest only –
new for 2013
• Banking Sector Vulnerability
• Risk to Doing Business
• Risk to Fiscal Stimulus
Aon Risk Solutions | Global Broking Centre | Crisis Management
12
Scope of the map
163 countries and territories rated
12 downgrades (last year there were 21 downgrades)
13 upgrades (last year there were 3 upgrades)
Africa East Asia &
Pacific
Eastern Europe &
Central Asia
Latin America &
Caribbean
Middle East &
North Africa South Asia
Swaziland Thailand Armenia Barbados Bahrain Pakistan
Azerbaijan Guatemala Oman
Belarus UAE
Macedonia
Montenegro
Africa East Asia &
Pacific
Eastern Europe &
Central Asia
Latin America &
Caribbean
Middle East &
North Africa South Asia
Cameroon Moldova Panama Algeria
Chad Turkmenistan Paraguay
Ethiopia Uzbekistan
Madagascar
Mali
Namibia
Aon Risk Solutions | Global Broking Centre | Crisis Management
13
Downgrades & Upgrades Summary
Downgrades - 12
1 moved from High to Very-High
• Chad
6 moved from Medium-High to High
• Algeria
• Ethiopia
• Madagascar
• Mali
• Turkmenistan
• Uzbekistan
3 moved from Medium to Medium-High
• Cameroon
• Moldova
• Paraguay
2 moved from Medium-Low to Medium
• Namibia
• Panama
Upgrades - 13
2 moved from Very High to High
• Belarus
• Pakistan
5 moved from High to Medium High
• Armenia
• Azerbaijan
• Guatemala
• Swaziland
• Thailand
3 moved from Medium High to Medium
• Bahrain
• Macedonia
• Montenegro
3 moved from Medium to Medium Low
• Barbados
• Oman
• UAE
Aon Risk Solutions | Global Broking Centre | Crisis Management
14
2013 Map Key
RISK TO FISCAL STIMULUS:
BANKING SECTOR VULNERABILITY:
RISK TO DOING BUSINESS: 3 new risk
icons
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15
Peril spectrum
Countries with all six “core” risk Icons
East Asia & Pacific
Eastern Europe &
Central Asia Latin America
Middle East & North
Africa South Asia
North Korea Afghanistan Argentina Algeria* Bangladesh*
Myanmar* Belarus Ecuador* Egypt* Pakistan
Papua New Guinea* Tajikistan* Honduras* Iran*
Nicaragua* Iraq
Venezuela Lebanon
Libya*
Palestine
Syria
Yemen
* New in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
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Peril spectrum
Countries with all six “core” risk Icons
Africa
Benin* Guinea Bissau
Burkina Faso* Guinea Conakry
Burundi* Kenya*
Cameroon* Liberia*
Central African Republic* Madagascar*
Chad* Mauritania*
Congo Brazzaville* Niger*
Congo DRC Sierra Leone*
Cote d'Ivoire Somalia
Eritrea Swaziland
Ethiopia* Uganda
Zimbabwe
* New in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
17
Exchange Transfer
Exchange Transfer: The risk of being
unable to make hard currency payments as
a result of the imposition of local currency
controls. This risk looks at various economic
factors, including measures of capital
account restrictions, the country’s de-facto
exchange rate regime and foreign exchange
reserves.
This risk Icon has been added to 29 countries and
territories, including Cameroon, Sri Lanka, and
Ukraine.
This risk Icon is removed in 13 countries, including
Albania, Cambodia, Paraguay, and Zambia.
85 countries have this Icon
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
18
Sovereign Non-Payment
Sovereign Non-payment: The risk of
failure of a foreign government or
government entity to honor its obligations in
connection with loans or other financial
commitments. This risk looks at measures
of both ability and willingness to pay,
including fiscal policy, political risk and rule
of law.
This risk Icon has been added to 12 countries and
territories including Gambia, Lesotho, Russia, and
Senegal.
This risk Icon is removed in 7 countries, including Bosnia,
Croatia, Trinidad & Tobago, and the United Arab
Emirates.
89 countries have this Icon
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
19
Political Interference
Political Interference: The risk of host
government intervention in the economy or
other policy areas that adversely affect
overseas business interests; e.g.,
nationalization and expropriation. This risk
is composed of various measures of social,
institutional and regulatory risks.
This risk Icon has been added to 3 countries and territories
including Moldova, Honduras, and Guatemala.
This risk Icon is removed in 14 countries, including El
Salvador, Peru, Thailand, and Zambia.
80 countries have this Icon
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
20
Supply Chain Disruption
Supply Chain Disruption: The risk of
disruption to the flow of goods and/or
services into or out of a country as a result
of political, social, economic or
environmental instability.
From 2013, this includes an assessment of
domestic supply chain risk.
This risk Icon has been added to 47 countries and
territories, including Burundi, Algeria, Mali, and Tunisia.
This risk Icon is removed in 8 countries, including Brazil,
India, Panama, and China.
97 countries have this Icon
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
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Legal & Regulatory
Legal and Regulatory: The risk of financial
or reputational loss as a result of difficulties
in complying with a host country's laws,
regulations or codes. This risk comprises
measures of government effectiveness, rule
of law, wider property rights and regulatory
quality.
This risk Icon has been added to 2 countries and
territories namely Armenia and Mali.
This risk Icon is removed in 10 countries, including Brazil,
Croatia, Peru, and Saudi Arabia.
94 countries have this Icon
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
22
Political Violence
Political Violence: The risk of strikes, riots,
civil commotions, sabotage, terrorism,
malicious damage, war, civil war, rebellion,
revolution, insurrection, a hostile act by a
belligerent power, mutiny or a coup d'etat.
Political violence is quantified using
measures of political stability, peacefulness
and specific acts of violence.
This risk Icon has been added to 21 countries and
territories, including Argentina, Philippines, Russia, and
Serbia.
This risk Icon is removed in 12 countries, including
Columbia, Kuwait, Indonesia, and Oman.
90 countries have this Icon
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
23
Risk to Doing Business – new 2013
Risks to Doing Business: The regulatory
obstacles to setting up and operating business in
the country, such as excessive procedures, the
time and cost of registering a new business,
dealing with building permits, trading across
borders and getting bank credit with sound
business plans.
This risk is found in 96 countries, including Argentina,
Bolivia, Dominica, Nigeria and Russia
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
24
Banking Sector Vulnerability – new 2013
Banking Sector Vulnerability: The risk of a
country’s domestic banking sector going into
crisis or not being able to support economic
growth with adequate credit. This risk comprises
measures of the capitalization and strength of the
banking sector, and macro-financial linkages
such as total indebtedness, trade performance
and labor market rigidity.
This risk is found in 106 countries and territories,
including China, India, El Salvador and Thailand.
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
25
Risk to Fiscal Stimulus – new 2013
Risks to Fiscal Stimulus: The risk of the
government not being able to stimulate the
economy due to lack of fiscal credibility, declining
reserves, high debt burden or government
inefficiency.
This risk is found in 94 countries and territories,
including Albania, Morocco, Liberia, Tanzania and
Uganda.
What is new
in 2013
Aon Risk Solutions | Global Broking Centre | Crisis Management
26
Political Risk Management
Contracts: Government
action that frustrates a
contract, that is, prevents or
restricts the performance of
a contract, or the buyer’s
ability to pay, or the supply
chain
Assets: Government action
that deprives a company of
all or part of its assets (i.e.
interferes with a company’s
ability to own & manage its
investments or stocks)
Political Risk Insurance
Contracts
Exports
Bonds
Imports
Loans
Assets
Equity & Debt
Projects
Plant & Equipment
Commodities
Aon Risk Solutions | Global Broking Centre | Crisis Management
27
Summary
163 countries and territories rated
12 downgrades (less than last year – 21)
13 upgrades (where the risk is rated as better than last year - 3)
Additional risk Icons – new for 2013
– Banking Sector Vulnerability
– Risk to Doing Business
– Risk to Fiscal Stimulus
Aon Risk Solutions | Global Broking Centre | Crisis Management
Aon Risk Solutions | Global Broking Centre | Crisis Management 28
Political Risk Map 2013: Launch Date 19th March 2013
Aon Risk Solutions | Specialty | Crisis Management 29
Contacts
Marketing
Ahmed Gawad
+44 (0)207 0864014
Aon Risk Solutions Global Broking Centre | Crisis Management
Media relations
Sarah Booker
+44.(0)20.7086.4872
Political Risks
Matthew Shires
+44 (0)207 0864373
Visit our website: http://www.aon.com/2013politicalriskmap/index.html