2022 Saw Political Risk Transform into a More Widespread Peril

The Russia-Ukraine War has transformed political risk from a low-frequency/high-severity risk into a more widespread peril, a new survey has found.

According to the 2023 Political Risk Survey Report from Willis Towers Watson (WTW), 92 percent of all responding companies experienced a political risk loss in 2022, up from 35 percent in 2020. That transformation has made political risk "everyone's risk," WTW said.

The survey also found 86 percent of Western European respondents reporting a net negative financial impact from the conflict in Ukraine, and 33 percent of North American firms reporting suffering a net negative financial impact.

Among survey respondents, 100 percent reported enhancing their political risk management capabilities since February 2022. In addition, 68 percent now purchase political risk insurance, up from 25 percent in 2019.

Nearly 50 percent of respondents in the WTW survey predicted that deglobalization will "greatly strengthen," while 42 percent said they expect decoupling from China to "greatly strengthen."

The WTW survey and interviews were conducted in January and February 2023 by Oxford Analytica. The report is based on responses from 50 companies from around the world, of which 50 percent have revenues greater than $1 billion, WTW said.