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Political risks for U.S. firms include tariffs and populism

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  • Topics:
    • Emerging Risks
    • Political Risk & War
    • Risk Management
    • Supply Chain / Business Interruption
    • Terrorism Risk
    • Topical Trends
    • Trade Credit

The rise of populist politics, and trade tensions between the U.S. and China will impact America’s businesses in the coming year, according to key research from Aon...

Aon’s 2019 Risk Maps, developed in partnership with Continuum Economics and The Risk Advisory Group, is an in-depth annual survey of the world’s political risk, terrorism and political violence, and helps organizations identify the major macro-economic and political developments that could affect their business in the coming year.

 

One key finding is that the heightened current trade tensions, and intense rivalry, between Beijing and Washington may continue over the long-run. 

 

John Minor, U.S. National Practice Leader, Political Risk at Aon commented: “The idea of ‘trade wars’ is unsettling to business leaders.  Uncertainty about the future of trade relationships – how contracts will be impacted, implications to supply chain and a business’s overall ability to market in certain geographies – makes business decisions much more difficult, creating potential downside exposures that companies are wise to consider.”

 

He continued: “Political risks can manifest in many ways.  An escalating trade war, for example, could increase the cost of completing a project or contract costs to the point of making it uneconomic, or force a company to rethink key elements of its supply chain.  In the most extreme circumstances, a trade war could force some companies out of business.”

 

Overall, the report notes that globally, lingering trade uncertainty and protectionism remain key sources of risk for businesses. Supply chain disruption risk is a rising concern, even in the strongest countries in the world, which tend to rely on imports. Climate change and extreme weather have exacerbated the risks of supply chain disruption in certain regions.

 

In addition, the 2019 study noted that the U.S., along with Germany, had the highest number of attacks and foiled national extremist terrorist plots.  It was notable that national extremist attacks, whether called hate crimes or terrorism incidents, were not conducted on behalf of established groups.

 

Scott Bolton, Director, Crisis Management at Aon said: “The rise of national extremist acts of violence, alongside concerns around Islamic State returnees, means that terrorism exposure within the U.S. is becoming more complex, leaving certain business and client types – retail, sports & entertainment, transport, religious sites for example – more vulnerable than others. Insurance solutions can accommodate these shifting risks, but do require tailoring, to deliver best-fit cover and response.”