Managing political risk in advanced economies

Abstract

Research in political psychology suggests that people who are angry at political conditions tend towards greater political participation and to disregard economic consequences of their choices. These characteristics can be found in voting outcomes associated with the wave of popular discontent sweeping North America and Europe. If this discontent is indeed related to inequality, as many presume, political risks in advanced economies could escalate significantly in the years ahead. Banks can address these risks by augmenting the political expertise of country risk teams, addressing political risks operationally and responding to rising risk as citizens.