In a new analysis, Verisk Maplecroft has overviewed the current state of political risk around the world, concluding that it is at its highest level in five years, with no sign of improvement.
Verisk Maplecroft says that, after two years in which the COVID-19 pandemic served as the primary source of global instability, the conflict in Ukraine was the main driver of risk in 2022 and the fallout will continue well into the foreseeable future. Runaway inflation and the rapid reshaping of the global energy system, both of which combined to fuel an unprecedented rise in socioeconomic tensions, will remain key factors in 2023.
“The fallout from armed conflict will remain a key risk trend for corporates, investors and insurers in 2023,” says Verisk Maplecroft’s Head of EMEA Research, Hugo Brennan. “The war in Ukraine is likely to escalate as both sides prepare for spring offensives; conflict and insecurity will continue to destabilise pockets of Africa; and interstate tensions risk tipping over into fighting in parts of the Caucasus, Central Asia and the Balkans.”
This upheaval has added fuel to social and political pressures that had simmered since the outbreak of the pandemic.
As shown by the unrest seen in Brazil and Peru in January, socioeconomic pressures that simmered throughout 2022 are likely to boil over in the year ahead says Verisk Maplecroft.
“As the social pressure cooker proves increasingly unable to contain the discontent of populations facing protracted economic hardship, the frequency and magnitude of the backlash against political institutions will remain near boiling point throughout 2023,” says Verisk Maplecroft’s Chief Analyst, Jimena Blanco. “It is likely no region will be spared, but the Americas will be particularly hard hit.”
