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 Food shortages, rising oil prices, political instability, rising inflation, economic uncertainty, increasing calls for regime changes, terrorist threats – you name it, we have it. The political, economic and social landscape globally and in Asia is changing on an almost daily basis and with these changes comes an even greater uncertainty of the country and political risks faced when investing or trading with overseas territories. In emerging economies in particular, political risk is expected to pose a considerably greater threat to trade and investment over the next five years.
Political and in country risks have risen to such a level that any company venturing overseas would have to seriously assess them before making an investment commitment. In order to assist in this task JLT after 12 months of research & development, has developed the World Risk Review, a political and economic risk assessment of 197 countries. This assessment is designed to help corporations, banks and others involved in trade and investment develop more robust risk management strategies.
We present here the risk ratings (broken down into nine different categories based on Investment Environment, Trading Environment and Political Violence) for 20 Asian countries, to help companies identify and evaluate the risks faced when venturing overseas.
| Country |
Political Violence |
Trading Environment |
Investment Environment |
| Strikes Riots and Civil Commotion |
Terrorism |
War and Civil War |
Country and Economic Risk |
Currency Inconvertibility and Transfer Risk |
Sovereign Credit Risk |
Expropriation |
Contractual Agreement Repudiation |
Legal and Regulatory Risk |
| Bangladesh |
7 |
7 |
6 |
6 |
6 |
7 |
7 |
7 |
7 |
| Brunei |
3 |
3 |
3 |
4 |
3 |
4 |
2 |
5 |
2 |
| Cambodia |
6 |
4 |
4 |
5 |
7 |
9 |
6 |
7 |
7 |
| China |
5 |
3 |
3 |
4 |
4 |
5 |
6 |
7 |
6 |
| Hong Kong (China) |
3 |
2 |
3 |
2 |
2 |
3 |
2 |
1 |
2 |
| India |
6 |
8 |
4 |
5 |
5 |
5 |
4 |
5 |
6 |
| Indonesia |
6 |
7 |
4 |
5 |
6 |
6 |
6 |
6 |
7 |
| Iraq |
10 |
10 |
10 |
8 |
8 |
9 |
9 |
8 |
9 |
| Korea (North) |
4 |
2 |
6 |
10 |
10 |
10 |
10 |
10 |
10 |
| Korea (South) |
4 |
3 |
4 |
3 |
3 |
3 |
3 |
4 |
3 |
| Macau (China) |
3 |
2 |
3 |
3 |
4 |
3 |
5 |
5 |
4 |
| Malaysia |
5 |
4 |
3 |
4 |
4 |
4 |
4 |
5 |
4 |
| Palestine |
10 |
10 |
10 |
10 |
10 |
10 |
10 |
10 |
10 |
| Papua New Guinea |
6 |
3 |
5 |
7 |
5 |
7 |
7 |
7 |
7 |
| Philippines |
6 |
7 |
6 |
5 |
5 |
6 |
6 |
5 |
6 |
| Singapore |
1 |
2 |
1 |
2 |
1 |
1 |
2 |
3 |
1 |
| Sri Lanka |
8 |
7 |
8 |
5 |
6 |
6 |
4 |
5 |
6 |
| Taiwan |
3 |
2 |
3 |
3 |
3 |
3 |
2 |
3 |
3 |
| Thailand |
6 |
6 |
5 |
7 |
6 |
5 |
6 |
7 |
6 |
| Vietnam |
5 |
2 |
5 |
5 |
5 |
6 |
6 |
7 |
6 |
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Rating guide: 1 = Low risks 10 = High risks
The full risk ratings for 197 countries can be accessed at http://www.jltasia.com/media/publications/pdf/WRRJuly2008.pdf
Whilst emerging market investment presents significant perils, these same perils can be managed through a considered risk assessment and management strategy, and by utilizing tools such as the WRR. At the same time that some of these perils can be “managed” some cannot be totally eliminated and this is where Political Risks Insurance (“PRI”) may provide a valuable safety net.
Queries or Comments? Write to us!
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