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Knowing, monitoring, and understanding the level of political risk associated with various countries is key in a world where people from all over the world are increasingly connected.
That said, the Political Risk Index (or PRI for short) is a metric that measures and assesses the level of risk attached to a specific country by examining 17 risk components. Examples of these components include export markets, social cohesion, international relations, real GDP growth, direct investment, and turmoil.
Here’s a closer look at some of the world nations with the highest Political Risk Index ratings, as well as some impactful factors that can influence such scores.
As of 2023, the following are some examples of countries found to have the highest levels of political risk.
Larger regions found to be associated with higher levels of risk include the Middle East and Africa. Some contributing reasons for the elevated risk levels include political instability stemming from ongoing conflict, as well as strict cuts in oil production.
Additional threats that emerged or escalated in 2023 and contributed to elevated risk levels include the Russia-Ukraine conflict, U.S. political polarization, and Chinese centralized power.
Non-specific general factors that can augment or reduce a country’s PRI, especially over time, include examples like the following.
Corruption is among the largest, most destructive contributors to political risk. It erodes a system from the inside out, damaging the trust of the people. This can in turn have far-reaching effects on investment environments, as well.
Ongoing disputes or far-reaching conflicts with other countries can absolutely add to political risk scores and affect that nation’s relationships with the rest of its neighbors.
Conflict doesn’t have to be external to negatively affect a country’s level of political risk. Forms of internal unrest – such as riots, civil confrontations, and various forms of violence – can drastically elevate things in the wrong direction, making other nations wary about investing or engaging in partnerships.
In cases where countries are especially prone to destructive natural disasters or adverse events related to climate change, it can raise political risk. This is because of the damaging effects and general stress such events put on a country’s people, economy, and overall social climate.