Each year Aon Trade Credit ranks the political and economic risk of 209 countries and territories, measuring risk of currency inconvertibility and transfer; strikes, riots and civil commotion; war; terrorism; sovereign non-payment; political interference; supply chain interruption; legal and regulatory risk. The risk in each country was ranked as Low, Medium-Low, Medium, Medium-High or High. A country with an "elevated" risk is defined as any country with a risk ranked at Medium-Low, Medium, Medium-High or High. The results of the analysis are detailed on the 2008 Political & Economic Risk Map, produced by Aon in partnership with Oxford Analytica, an international consulting firm. Oxford Analytica draws its analysis from a global network of more than 1,000 experts to make independent judgments about geopolitical risk.
According to the 2008 Political and Economic Risk Map, multinational organizations in 25 of the 50 largest global economies face elevated political and economic risks - including risks of business interruption caused by war, terror attacks, and political interference.
Some of the countries highlighted are those nations whose economies are among the fastest growing ones. Yet, even some of the wealthiest nations are under risk.
Thus, terrorism threat remains a factor in the UK in light of last year's attempted car bombings in London and Glasgow, while the country has been placed on "Credit Risk Negative Watch" due to its exposure to the sub-prime credit crunch.
Overall, amongst the top 50
economies, the analysis found political and economic risk is at its highest in
the oil-rich nations of Iran, Nigeria, and Venezuela, where businesses face
civil unrest, war, terrorism, and nonpayment by governments for services
rendered. For example, companies doing business in Russia face an increased
degree of state control in the natural resources sector. Additionally, the
global risk management community is increasingly concerned about supply chain
risks in Asia.
The Global Credit Crunch
Aon has also introduced a new feature to their Risk Map, the Global Credit Crunch Index, which measures emerging markets' exposure to international financial turmoil. The index lists 25 nations for which exposure to the global credit crunch is other than Low. It finds that particularly the newer entrants to the global economy, such as Turkey, Hungary, and Romania, are more likely to be impacted by a global credit crunch.
However, while political and economic risks to companies doing business in the United States, Germany, and the United Kingdom remain comparatively low, companies doing business in those countries are potentially more vulnerable to business interruption due to terror attacks than those doing business in Japan, the world's second largest economy.
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Oxford Analytica, an international
consulting firm, draws its analysis from a global network of more than 1,000
experts - including senior faculty members at Oxford University and at major
research institutions worldwide - to make independent judgments about