Firms may need to tighten political risk reporting

Subject

Political risk reporting.

Significance

Dramatic political developments such as the election of Donald Trump as US president, Brexit and the rise of far-right politicians in parts of Europe and most recently in Brazil have elevated the concept of political risk in global business circles. Yet analysis of annual reports from 2012 to 2017 of companies listed on the Financial Times Stock Exchange (FTSE) 100 suggests that political risk communication within corporates is a reactive practice, shaped by news rather than long-term mitigation strategies.

Impacts

• Firms are likely to increase their investment in internal alerting structures for political risk.
• A rising number of companies will integrate political risk mitigation into their business strategy.
• The political climate in the developed world will be unpredictable for the foreseeable future.