Introducing Morning Consult’s Global Political Risk Ratings
Morning Consult is pleased to announce the launch of our Global Political Risk Ratinga high-frequency political risk management tool covering 36 markets, with ratings published monthly for Morning Consultation Pro subscriber data and component ratings available daily for Morning Consultation Intelligence clients, including via API. Ratings are narrowly defined to reflect the degree of public approval of the incumbent chief executive and his or her country’s trajectory in each rated market, and are associated with a heightened likelihood of economic policy uncertainty and political unrest based on higher risk.
The new ratings, which draw on sovereign credit rating models, are intended to support data-driven risk management efforts in corporate scenario planning, as well as portfolio management and investment decision-making, including by providing quantitative policy input to sovereign credit ratings. For public sector entities, the ratings can also be used to systematically assess stability issues in countries of concern. To our knowledge, our ratings are the only measures of sovereign political risk derived from high-frequency surveys available for corporate use.
Why now?
In today’s global political environment, companies and portfolio managers are increasingly facing headwinds from domestic political polarization, rising populism and political unrest, and political and electoral uncertainty around the world. Our new risk ratings aim to help clients effectively and rigorously navigate these headwinds using systematic, streamlined and easily understandable measures that are intended to be accessible to a variety of stakeholders, from analysts to C-suite executives.
A New Suite of Tools for a Volatile Global Political Landscape
For clients wishing to do so, the recently launched associated risk scoring and management tools now available through Morning Consult Pro include:
- Monitoring Global Political Risk Ratings:A one-stop shop for our latest ratings, rating actions (e.g. upgrades and downgrades) and associated forecasts, plus interactive summary visuals by market and market group (updated monthly).
- Market Commentary and Risk Outlook (MACRO) Policy Briefings:A monthly briefing providing our analytical assessments of rating factors, forward risk outlook and upside and downside scenarios and sensitivities (also available via the tracker above).
- A companion chart pack, a trend data file with historical risk assessments, and a Risk rating: definitions and methodology (all available via the tracking page above, with data access limited to Morning Consult Pro+ subscribers).
By launching these tools, Morning Consult aims to provide our subscribers, clients and partners with a variety of opportunities to better understand and mitigate their exposure to political risk – including by comparing risk profiles across the markets in which they operate or hold assets, and by measuring and tracking their average risk exposure globally or by region – and then communicating this information to stakeholders and decision makers.
Differentiators
Existing quantitative indicators of political risk have various limitations, including being published at a low frequency, not being sufficiently responsive to political developments (i.e., the flatline syndrome), being subject to a high degree of analyst influence, or being overly complex in design. The latter is typically due to a heavy reliance on composite indices with many pillars, sentiment analysis algorithms that are difficult to analyze, and indicators derived from social media listening that are often noisy and pose challenges in identifying signals.
Our measures overcome these limitations: our newly launched scores are high-frequency, responsive, and systematically derived from retroactively stable survey data, which are both transparent and easy to interpret.
For clients who need to make decisions based on instantaneous data, high-frequency data that reacts to political developments is essential, as is the certainty provided by our consistent construction of risk measures over time. The stability in rating construction and our reliance on standardized input data also allows clients to infer that when risk ratings change, they are due to fundamental changes on the ground, rather than subjective differences in opinion among analysts. Our reliance on public opinion data to construct ratings, as opposed to more opaque methods – as well as our reliance on a standardized letter-based rating scale – also makes ratings more accessible to technical and non-technical stakeholders, with our MACRO policy briefs providing the details on why ratings are changing at that time and where they are moving.
Use cases
Business and Financial Services Applications
Our newly launched ratings support a variety of private sector use cases. For enterprise risk monitoring, we recommend reviewing the ratings monthly to compare risk profiles across countries in which you have a business presence or supply chain activity, and assess where risk profiles have changed the most/least. In parallel, we recommend reviewing our monthly MACRO Political Briefing to understand the drivers of these changes and our outlook for how things will evolve over the next six months. Clients with access to the underlying ratings data (Morning Consult Pro+ subscription required) can also assess enterprise-wide or industry-specific risks by measuring and tracking average risk exposure across all global markets in which you operate and/or by region.
For financial services firms and rating agencies, our risk ratings offer a new opportunity to integrate high-frequency political data into systematic and discretionary investment decisions and portfolio allocation strategies, as well as into sovereign rating models, for example by using our core ratings for monthly or quarterly rebalancing or by leveraging data from our higher-frequency rating components to assess risk in near real-time.
In both sets of applications, consultation of our ratings as well as complementary data products intended to support the monitoring of political sentiment, including our Monitoring Sino-US relationsOUR Monitoring US Foreign PolicyOUR Global tracking of corporate objectivesand our monthly Global Policy Outlook Report Series — provides a global perspective on political and strategic risks in the world’s largest and most investable consumer markets.
Applications for the public sector
For public sector entities monitoring political risks and stability dynamics in countries of concern, our ratings provide a standardized and holistic measure to do so, along with supporting data products, including our Tracking endorsements from world leaders, Global Soft Power Ranking, Global ranking of political polarizationAnd Reputation Tracking in the United States.
Macroeconomic information
Our ratings reveal, among other macroeconomic insights, that markets generally considered the most creditworthy and safest for multinationals and portfolio managers often have higher political risk. Continental Europe, with low risk ratings for France and Germany, is a good example.
