CREDIT RISK AND POLITICAL RISK IN THE NEW WORLD
RC: In broad terms, could you outline some of the main credit and political risks facing companies in today’s business world?
Castellano: Credit and political risks are an important feature for many companies and I think in the last 20 years we have seen an incredible transformation, with manufacturing companies diversifying not only to other countries but other continents as well. One consequence, plus the unpredictability of the future of the world, has been that these companies have turned to supply chain financing. In terms of credit risk and political risk, I would mention that over the last 50 years we have not seen that many events of political violence, state intervention or restrictions on dividends. Argentina was the only sovereign to default in the last 30 years. And of course we have seven countries that have been banned by sanctions, but that is still a limited number. However, we see a lot of volatility and instability in the markets, which still leads to problems for companies without actual political risk events.
Apr-Jun 2017 Issue
Zurich