More than 90% of companies have suffered a political risk loss in the last year.

Nine out of 10 companies have suffered a political risk loss in the last year, according to a new report.

Over the past year, political risk has changed from a low-frequency, high-severity peril into “everyone’s risk.”

It is reported an unprecedented 92% of companies had experienced political risk loss in 2022, up from just 35% in 2020.

Other findings include:

• 86% of Western European respondents reported a net negative financial impact from the war in Ukraine.
• 33% of North American companies suffered a net negative financial impact.
• 48% of respondents reported a direct political risk loss in one or more BRIC countries (Brazil, Russia, India and China)
• All responding companies have enhanced their political risk management capabilities since February 2022
• 68% of respondents now purchase political risk insurance, up from 25% in 2019.
• Almost 50% predicted that deglobalisation will “greatly strengthen”.
• 43% predict that decoupling from China will “greatly strengthen”.

The war in Ukraine and resulting humanitarian consequences have had a “devastating” business impact, according to one European respondent. “We have decided to end all our operations in Russia and Belarus,” a US tech company respondent said. “We suffered a loss of almost $1 billion.”

Another respondent said the shock of war on the European continent had triggered a “paradigm shift.”

“Business and politics have lived in two different realities,” an executive in the automotive industry said. “The events of the past year have now aligned realities.”

The Ukraine war heads the list of top risks for 2023, followed by decoupling from China and crisis and new regulations in the European Union.

“Panelists were worried about the escalation of the conflict in Ukraine, but more worried about complications like sanctions and inflation.” “They’re worried that they could be arrested for facilitating avoidance of sanctions, for example, or that they could be pressured to renegotiate energy contracts next autumn. At the same time, they have more profound concerns about how globalised business models can be made to work in a politically divided world.”