Markets and political risk

Using data and qualitative research to grow a multi-asset portfolio

A sovereign wealth fund sought our help in improving its awareness of political risks and trends across emerging and frontier markets, as well as some developed countries experiencing political instability.

  • Challenge

    To protect holdings from downside risks, the fund’s risk management team developed a single standardised approach to tracking country, sector and company risk across both its equities and fixed income holdings worldwide, as well as screening potential new investments across these dimensions. However, when it came to country risk inputs, the fund lacked data and research that was robustly comparable across multiple regions, institutional frameworks and growth models.

  • Solution

    Accessing our 150+ political and ESG risk indices, the fund integrated the data inputs into its overall risk tracking and screening processes. The risk team manage political and ESG risk concurrently, enabling it to take a holistic view of country outlooks. Its package was tailored to include in-depth qualitative risk profiles covering all dimensions of political and ESG risk to help the team conduct detailed due diligence in its key countries of interest.

  • Outcome

    The fund has been able to successfully navigate the steady expansion of its global investments. Integral to this has been the consistent integration of country-level political risk inputs into the overall risk management process. In particular, our coverage of structural political risks has given the risk team the context it requires to take a long-term view.