Established businesses seeking alternative areas of growth arelooking to expand into emerging markets.

But those doing business in those markets have to factor in theadverse effects of government action or inaction.

To manage and mitigate the risk of establishing a presence in anemerging market, organizations are looking for comprehensivehigh-level overviews of their exposure to political risks in theregion.

One source that businesses can use to assist them in measuringthe risk they face is London-based insurance giant Aon’sinteractive Political Risk Map, now accessible through thecompany’s upgraded portal,which is free, with registration.

By using the interactive map, businesses can plot trends,measure their exposures and review the potential risks they mayface as they look to invest, grow and diversify.

Produced in partnership with New York City researchfirm Roubini GlobalEconomics, the interactive tool shows the political risklandscape in countries of interest. Through the risk icons, userscan see the political risks in 162 countries and territories innine categories:

• Exchange transfer.
• Legal and regulatory risk.
• Political interference.
• Political violence.
• Sovereign nonpayment.
• Supply chain disruption.
• Risk of doing business.
• Banking sector vulnerability.
• Risk to fiscal stimulus.

Aon’s political risk outlook for 2016

According to Aon’s political risk assessment, 2016 will bedefined by weak global growth, shifting trade patterns, monetarypolicy divergence and slow interest rate normalization.

Some emerging markets are likely to maintain strong rates ofgrowth, whereas China will see growth rates decline further.

Russia’s economy will likely stabilize as it recovers fromrecession. Brazil and Venezuela are expected to suffer furtherpainful contractions in their economies.

The assessment also notes the following global and regionalthemes:

• |
  • Greater use of capital controls. Countriessuch as Angola, Ghana and Nigeria are expected to keep existingcapital account restrictions. China will most probably tightencontrols to manage capital outflows, which could discourage foreigninvestment
  • Oil-producing nations’ requirements to findsubstitutes for lost revenues will put pressure on theircorporate sectors; at minimums through tax regime adjustments andat extremes through initial public offerings of state-ownedenterprises. Producers such as the Gulf CooperationCouncil countries, Colombia, Malaysia, Kazakhstan and nowRussia that have more resilient institutions and greater foreigncurrency reserves will be better positioned to survive this cycle.Angola, Ecuador, Ghana and Venezuela are not so fortunate. In thecurrent climate investors should prepare for increases in defaultsand arrears from state owned enterprises.
  • Liquidity support. Certain countries willrequire financial support from the International Monetary Fund andother multilateral financial institutions to assist theiradjustment to the commodity price shock.
  • Levels of political violence will remain high.ISIS, despite losing territory, is gaining influence and providingcover to other radical extremists. These trends will also increaserefugee flows.
  • Economic challenges and border disputes in Asia willencourage nationalism. In some cases, there will beincreased defense spending and military shows of strength
  • Greater government intervention and populistpressure in the Commonwealth of Independent Statecountries will further undermine policy implementation. Ukrainecould put its IMF program at risk.
  • Positive trends will include the progressive lifting ofsanctions on Cuba and Iran, and a more pro-business policystance in Argentina following the election of President MauricioMacri.

To check out the interactive maps and obtain a copy of the mostrecent political and terrorism risk reports, visit Aon’s riskmaps portal.

Related: 10 P&C lines likely to see rate decreases in2016

Are you following us on Facebook?