Backlash against free trade and globalization could lead to slower global growth.
No one can be complacent about geopolitical risks these days. It is a big topic for multinationals: some organizations significantly improved in building their risk assessments, but still a clear majority of companies does not have full visibility of their political risk management. As shown in the Global Risks Report 2017, failure of national governance is placed by executives in 37 countries in the top-3 highest risk to doing business. The shocks and surprises of the past few years show how easily assumptions about liberal markets, international relations, conflict, and democracy can be shaken. Geopolitical volatility has become a key driver of uncertainty, and we expect it to remain one over the next few years.
Earlier in 2017 Zurich worked with the Atlantic Council to develop insights into selected risks with geopolitical consequences and interconnections. In the study “Our World Transformed: Geopolitical Shocks and Risks” we examined the growing risks of protectionism, energy crisis, and water and food scarcities.
The threat of growing protectionism continues to be a daily feature in the news. Geopolitical risks are interrelated, so they need to be looked at holistically in the context of other risks. Understanding the connections between different kinds of risks is a vital step in managing them and avoiding surprises. There are numerous interconnections explored here: escalating China-US tensions would greatly increase the risk of protectionism. In these Insights we are looking into the risks associated with the protectionism growth and we also reveal the ways to mitigate those.