What is a political risk?
Scenarios which can destroy the security or even the existential basis of the population or an individual are considered political risks. Political risks often occur suddenly and without advance warning. Unlike a violation or the law or the failure to comply with local regulations such as concealment, the results of political risks can potentially affect every person. However, based on the previous situation and certain indicators, it is possible to guess how high the probability of such a political risk occurring may actually be. Specifically, fourteen political risks are explained below, any or all of which can jeopardize security and may even entail a loss of life:
|War||A direct, military conflict between two or more warring parties, wherein one of the players must be a state. The definition is based on a quantitative approach in accordance to the Correlates of War COW project, which was developed at the University of Michigan. It states that every armed conflict with more than 1000 killed combatants is considered war. A player can cause war or begin to gain advantages in its environment to intimidate the opponent, to impose force or to introduce a political system, for imperial reasons, for financial reasons or in order to prevent a counter-attack.|
|Civil War||An armed, internal conflict in which participants of the same nation or society fight each other. The conflict can be caused by the independence efforts of a party, by territorial tensions, by leadership or power claims or for reasons of historical revenge. The parties are often based on political, ethnic or religious communities. No specific number of victims is quantified for this definition.|
|Post-war results||The following scenarios are examples of post-war events, territorial changes, the imposition of new legal systems, a change in the regime and the political system, forced repatriations, losses in the population and the infrastructure, influxes of refugees, various forms of damage to, and the militarization of, society at large.|
|Coup d’état according to the constitution||A radical, sudden and often violent change in the regime or the political regime. This also involves the removal of authorities and the decommissioning of state institutions, certain types of revolutions including coups d’état.|
|Simmering conflicts which are warlike in nature.||A military and political conflict wherein the direct and military violence occurs on a smaller scale than in conventional wars in which the exertion of political and diplomatic pressure occurs to a greater extent. Simmering conflicts are often triggered by non-state players whose military and political resources are less than those held by the state. These conflicts can often last a long time and the conflicting parties have enough time to recover or to mobilize new battle troops. This form of conflict does not require a decisive victor to emerge.|
|Terrorism||A method of exercising militant force, the intentional or planned use of force or the threat to use force against the civilian population or against certain groups of society. Here, the aim is to achieve a defined set of political, religious or ideological objectives. Terrorist attacks include bombings, attacks against the infrastructure, car jacking and kidnapping. The goal of acts of terrorism is to evoke a major media response.|
|Piracy||Piracy encompasses the act of occupying any vehicle with the goal of using violence and exerting force on individuals. Politically-motivated piracy can be employed by political groups, terror organizations or warlords. The goal of such groups is security funds for additional political activities or media attention.|
|Kidnapping with a political motive||The underhanded kidnapping of one or more persons without a legal basis and incarceration for political reasons. Kidnapping with a political background sets itself apart from other forms in that the kidnapper wishes for certain political conditions to be satisfied as a precursor to release of the victim of the Kidnapping.|
|Revolt and violent coup||Revolts are usually violent acts of resistance against the legal authorities, or a challenge to the official political leadership. Coups are often initiated by conspirators who do not hesitate to use violence on the civilian population.|
|Unrest, strikes and uprisings||A strike is a means of exerting pressure on an employer or the government by a group of workers. A strike includes the suspension of work and is often accompanied by different forms of protect to exert pressure. Strikes can result in revolts and unrest. Both are forms are resistance against the state authority and they express some form of dissatisfaction with society. A revolt involves a crowd of people taking to the street and protesting violently on behalf of its cause. Unrest can result in vandalism and damage to public and private property.|
|Confiscation||The seizure of private property by the public administration without any compensation.|
|Expropriation||Confiscation of third-party property by the authorities. ‘The public good’ is often provided as a reason for the confiscation.|
|Nationalization||An act with a financial background wherein a state manages a company or a natural resource. Foreigners may still be entitled to manage or own shares in nationalized companies. However, foreign investments are only permitted to a limited extent or may be prohibited completely. State-owned businesses may only be managed by individuals with a certain nationality.|
|Seizure||A financial loss for an investor or a contractual partner because the access to its property becomes impossible in another country due to political circumstances.|
How is the political risk calculated?
The political risks listed above are measured on the basis of five different indices. These data records cover the different risk factors and assess all countries annually. The five data records are calculated into a new index which covers all political risks based on a calculation code. If a country has a higher point value, this means a higher political risk. The maximum number of points and thereby the highest political risk is 50 points. Thus, there is an assessment in all five rankings for every country and thereby also on all political risk factors:
|Freedom in the World Index||This index is based on political rights and civil rights in a certain country. The countries are divided into one of four classes. The Index appears annually and is published by the Freedom House Organization.|
|Global Peace Index||The Index appears annually from the Economics and Peace Institute. The countries are divided into one of five ranking classes based on their security risk. Unrests, strikes and revolts as well as war-based conflicts or post-war events are covered in these rankings.|
|Global Terrorism Index||Also published by the Economics and Peace Institute annually, the Global Terrorism Index measures the influence and the risk of terrorism per country. A country is divided into one of six ranking classes based on an average of the last five years.|
|Corruption Perceptions Index||This index measures the degree of corruption in the public sectors based on expert opinions. A high level of corruption weakens security, extortion and kidnappings increases and criminality grows. The publisher is the Transparency International Organization. The countries are classified annually into one of ten corruption classes.|
|Conflict Barometer Index||L’indice mesure l’intensité des conflits armés sur le plan national. Le baromètre des conflits classe chaque pays dans l’une des catégories parmi quatre, celles-ci allant d’un conflit violent à la guerre. L’auteur du baromètre annuel est l’Institut de Heidelberg de recherche en conflits de l’Université de Heidelberg.|
The political risk analysis benefits you!
The risk analysis studies all countries where Soliswiss members reside in terms of the risk potential, starting with the political risk factors listed. The Soliswiss index sums up the overall risk of a certain country and builds the basis for the country ranking.
It is the goal to show a risk level of a country based on the risk calculation and the country ranking. This shows how high-risk a certain country of residence is. The risk posed by the individual political risk factors and the overall level of risk tend to differ from one country to another, and may also change over time in response to political, financial and social developments. For these reasons, the country ranking is revised annually and the risk map is adjusted.
We offer you the know-how about the latest risk situation. With this knowledge, any Swiss citizen is free to join Soliswiss. In the event of a loss of life due to political risks, Soliswiss can intervene with a financial contribution to help members abroad and to secure their existence abroad. Membership of Soliswiss creates security.
Freedom House (2015): Freedom in the World Index 2015. (https://freedomhouse.org/report-types/freedom-world#.VYqs7v4w_cs [24.06.2015])
Heidelberger Institut für nationale Konfliktforschung (2014): Conflict Barometer 2014. (http://hiik.de/de/konfliktbarometer/pdf/ConflictBarometer_2014.pdf [24.06.2015])
Transparency International (2015): Corruption Perceptions Index 2014: Results. (http://www.transparency.org/cpi2014/results [24.06.2015])
Vision of Humanity (2014): Global Peace Index. (http://www.visionofhumanity.org/#/page/indexes/global-peace-index [24.06.2015])
Vision of Humanity (2013): Global Terrorism Index. (http://www.visionofhumanity.org/#/page/indexes/terrorism-index [24.06.2015])