Focus On Heightened Political Risk

Political unrest in the Middle East continues to dominate the news headlines amid recent protests in countries such as Egypt, Tunisia and Yemen.

Earlier today credit  ratings agency Moody’s Investors Service Inc. downgraded Egypt’s government bond ratings and changed its outlook to negative from stable.

Moody’s said the decision was prompted by the increased political event risk and concern that the policy response could undermine Egypt’s already weak public finances.

Meanwhile, a number of international businesses have  started to suspend  operations in the country due to the  volatile situation.

Just last week Aon warned that the level of political risk is rising in more countries than it is declining this year, leading to a greater need for political risk insurance cover.

A total of 19 countries were downgraded in Aon’s 2011 political risk map, while 11 countries were upgraded.

Political risk will continue to be a major influencer for businesses transacting in emerging markets in 2011, according to Aon.

The map measures the political risk of 211 countries and territories based on the level of risks such as currency inconvertibility and exchange transfer; strikes, riots and civil commotion; war; civil war; sovereign non-payment; political interference; supply chain disruption and legal and regulatory risk.

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