Emerging markets no safe haven: Aegis
From People Jan 17 2012 BY: Will Jackson
, Contributing editor
, International Adviser
Companies should be wary of viewing emerging and frontier markets as a “safe port in a global storm”, according to research from Aegis Advisory and Integro Insurance Brokers.
As International Adviser reported, the two firms launched a Strategic Risk Index last year – a weekly measure of the main risks in the world economy, accompanied on a quarterly basis by a report detailing strategic business risk in 40 of the largest emerging markets.
The report for the fourth quarter of 2011 indicated that, while many commentators have focused on growing risks in Europe, the average level of risk in emerging economies increased by more than that of the developed world last year.
Between January and December, the index – which ranges from one (safest) to ten (riskiest) – rose by 5.2% for the world, to 3.28. However, there was a marked difference between the readings for developed and emerging markets, which grew by 3.5% and 5.5% respectively.
The key drivers of increased risk in the emerging markets were the Middle East, whose strategic risk score increased by 12.1%, and Sub-Saharan Africa, which saw a rise of 8%. Within the Middle East, Syria registered the highest score at 7.5, making it riskier than Iraq and Libya.
“This analysis reminds us of a fact that is sometimes forgotten in the rush to talk down the eurozone: despite all the challenges they are facing, at a strategic level, the likes of Italy and Spain are still considerably less risky than market favourites such as Brazil or Turkey,” said Mal Božić, assistant director at Aegis Advisory.
Aegis is a global provider of private security and risk management, with offices in the UK, US, Iraq, Afghanistan and Bahrain. Integro has a London-based special risks team, and specialises in insurance solutions for risks in “frontier and hostile environments”.