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SPECIAL REPORT: JD Supra - The Volatility of Geopolitical Risk

SPECIAL REPORT: JD Supra - The Volatility of Geopolitical Risk
Syndicated by GEO´ PRChannel Team
European technology Centre, Malaga

Globalization has drawn geopolitical risk increasingly into the spotlight, connecting international politics with global markets. While political risk can refer to domestic policy making, national corporate laws, and investment regulations, geopolitical risk largely affects markets and assets across borders.

Symptoms of hostile tensions between two states, such as missile launches, drone attacks, or airstrikes, can send market prices soaring and create a panic.

Following the killing of Major General Qasem Soleimani in a targeted US drone strike in Baghdad on January 3, 2020, social media users and tabloids spoke only half-jokingly of a forthcoming Third World War. Another event that caused a significant market panic was the drone attack on Saudi Arabia’s state-owned Aramco oil facilities in September 2019, which resulted in a dramatic single-day increase in oil prices. In that instance, however, prices recovered relatively rapidly, leaving businesses and risk managers uncertain about the true magnitude of the impact that geopolitical incidents have on markets.

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