Aon: Arab Spring Revolts Spur Political-Risk Concerns

While clarity has begun to emerge in some of the countries affected by the Arab Spring, the resulting tension has spurred or intensified protests in dozens of countries—and this remains a concern for businesses operating in those nations, says Aon.

Aon Risk Solutions, the global risk-management business of Chicago-based insurance-broker Aon Corp., made this assessment as it released its 2012 Political Risk Map on Feb. 8. The map measures political risk in 167 countries and territories to assess different risk levels.

“These uprisings and protests remain a key concern in 2012, and we see this reflected in rating downgrades of several countries,” Roger Schwartz, senior vice president of political risk for Aon Risk Solutions' crisis-management practice, says in a statement. “This is forcing [CEOs and CFOs] of businesses with overseas operations in emerging markets to revisit risk-management and risk-mitigation measures.”

The Eurozone-debt crisis remains a significant risk and extends to those countries economically or otherwise dependent on the region.

The map's ratings reflect a combination of analyses by Aon Risk Solutions; Oxford Analytica, a global analysis and advisory firm; and the opinions of 26 Lloyd's syndicates and corporate insurers actively writing Political Risk insurance.

Each country on the map is rated according to the different types of risks it faces, and these risks are indicated by the following icons:

• Exchange Transfer—The risk of being unable to make hard currency payments as a result of the imposition of local currency controls. Seventy-one countries have this risk icon.
• 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. There are 104 countries with this risk icon, making it the most common risk on the map.
• JPolitical Interference—The risk of host-government intervention in the economy or other policy areas that negatively affect overseas business interests. Ninety-two countries and territories have this risk icon.
• Political Violence—The risk of strikes, riots, civil commotions, sabotage, terrorism, malicious damage, war, civil war, rebellion, revolution, insurrection, hostile act by a belligerent power, mutiny or coup d'état. Eighty-one countries have this risk icon.