Political risk tops companies’ ERM risk registers, according to latest Willis Political Risk Survey
Rhea-AI Summary
Political risk has emerged as a critical concern for global companies, with 75% ranking it among their top five Enterprise Risk Management risks and 11% placing it at number one, according to Willis's eighth annual Political Risk Survey. The study reveals that 58% of organizations expect negative financial impacts from US tariffs, nearly matching the 60% affected by the Russia-Ukraine conflict in 2023.
The survey highlights that 2023 saw the highest political risk losses in eight years, with 18% of companies requiring earnings restatements due to losses from expropriation, political violence, and currency issues. Companies primarily used direct government negotiations and political risk insurance to recover losses.
Key concerns for 2025 include US policy uncertainty, geopolitical tensions affecting market access, and state-backed cyber threats. The research, based on 66 company surveys and 15 in-depth interviews, shows political risk has evolved from a sector-specific concern to a broader threat with higher potential losses.
Positive
- Company demonstrates strong risk analysis capabilities through comprehensive annual Political Risk Survey
- Established market position in political risk analytics and consulting services
- Companies actively using WTW's risk mitigation strategies and insurance services to recover losses
Negative
- 18% of surveyed companies required earnings restatements due to political risk losses
- 75% of clients face significant political risks affecting their operations
- Highest political risk losses recorded in 2023 since survey inception
- 58% of respondents expect negative financial impact from US tariffs
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LONDON, May 01, 2025 (GLOBE NEWSWIRE) -- Political risks rank among the top five risks on the Enterprise Risk Management (ERM) risk register for
The survey revealed that
Other key findings were:
- Over the past eight years since the survey began, 2023 saw the highest political risk losses, driven by expropriation, political violence and currency convertibility issues. Notably,
18% of respondents faced losses significant enough to require corporate earnings restatements.
- Companies were most likely to rely on direct negotiations with host governments and political risk insurance to recover such prior losses. In 2025, the most common risk mitigation strategies against potential future losses were diversification and a "three lines of defense" approach
- Top political risk concerns for 2025 included U.S. policy uncertainty (especially tariffs) and tensions between the U.S. and its allies.
- Other major risks included restricted access to key markets due to geopolitical tensions and the threat of state-backed cyber and disinformation attacks.
The research includes a survey of 66 companies and in-depth, anonymized interviews with 15 companies.
“In the eight years since we began this research, companies’ political risk concerns have changed almost unrecognizably,” said Sam Wilkin, Director of Political Risk Analytics at Willis. “In 2018, political risk was mostly a worry for highly exposed sectors investing in risky countries like Venezuela. Today, political risk concerns apply across sectors, involve a much higher level of potential loss, and are focused on United States policy.”
The complete report can be downloaded here.
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