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he fact that the world did not experience a systemic financial crisis in 2022 is a minor miracle, given the rise in inflation and interest rates, not to mention a massive increase in geopolitical risk. But with public and private debt having risen to record levels during the now-bygone era of ultra-low interest rates, and recession risks high, the global financial system faces a huge stress test. A crisis in an advanced economy - for example, Japan or Italy - would be difficult to contain.

True, tighter regulation has reduced risks to the core banking sectors but that has only led to risks shifting elsewhere in the financial system. Rising interest rates, for example, have put huge pressure on private equity firms that borrowed heavily to buy up property. Now, with housing and commercial real estate on the brink of a sharp, sustained drop, some of those firms will most likely go bust.

In that case, the core banks that provided much of the funding for private equity real estate purchases could be on the hook. That has not happened yet, partly because lightly regulated firms are under less pressure to mark their books to market. But suppose interest rates remain stubbornly high even during a recession (a distinct possibility as we exit the ultra-low-rate era). In that case, widespread payment delinquencies could make it hard to maintain appearances.

The UK's recent financial misfortunes demonstrate the kind of unknowns that could pop up as global interest rates increase. Although the former prime minister Liz Truss took all the blame for the near meltdown of her country's bond markets and pension system, the main culprit turned out to be pension fund managers who essentially bet that long-term interest rates would not rise too fast.

Japan, where the central bank has kept interest rates at zero or negative for decades, might be the world's most acutely vulnerable country. In addition to ultra-low rates, the Bank of Japan has also engaged in yield curve control, capping five-year and 10-year bonds at about zero. Given the increase in real interest rates around the world, the yen's sharp depreciation, and high inflationary pressures, Japan may finally exit its near-zero era.

Higher interest rates would immediately put pressure on the Japanese government, as the country's debt amounts to 260% of GDP. If one were to integrate the BOJ's balance sheet, roughly half the government debt bought by the private sector is effectively in short-maturity bonds. A 2% interest rate increase would be manageable in a high-growth environment but Japan's growth prospects will most likely decline as long-term real interest rates continue to rise.

Japan's enormous government debt almost certainly constrains policymakers' options for managing long-term growth. Still, given the government's taxation powers and the possibility of inflating away the debt, the problem should be manageable. The real question is whether there are hidden vulnerabilities in the financial sector that could be unearthed if inflation continues creeping up and Japan's real interest rates increase to US levels. That has been the norm through most of the past three decades, even though Japan's inflation expectations are currently much lower than in the US.

The Tokyo skyline. A crisis in an advanced economy - Japan or Italy, for example - would be difficult to contain. Photograph: Yuichi Yamazaki/AFP/Getty Images

The good news is that after almost three decades of ultra-low interest rates, Japanese expectations for near-zero inflation are well anchored, albeit likely to change if today's inflationary pressures prove long-lasting. The bad news is that the persistence of these conditions could easily lure some investors into believing that rates will never go up, or at least not by much. This means that bets on interest rates remaining relatively low might become rampant in Japan, as they previously had in the UK. In this scenario, further monetary tightening could blow things up, creating instability and adding to the government's budget problems.

Italy is another example of latent risk. In many ways, ultra-low interest rates have been the glue holding the eurozone together. Open-ended guarantees for Italian debt, in line with the former European Central Bank president Mario Draghi's 2012 promise to do " whatever it takes," were cheap when Germany could borrow at zero or negative rates. But this year's rapid interest rate rises have changed that calculus. Today, Germany's economy looks more like it did in the early 2000s, when some called it " the sick man of Europe ". And while Europe is comparatively new to ultra-low rates, you have to be concerned that a sustained wave of monetary tightening could, as with Japan, reveal enormous pockets of vulnerability.

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If there is a global recession without a financial crisis, there is a decent chance that the coming economic downturn will be milder than expected. In an environment of negative growth, high inflation and rising real interest rates, that would be a very fortunate outcome.
Kenneth Rogoff is professor of economics and public policy at Harvard University. He was the IMF's chief economist from 2001-03.

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The world economy faces a huge stress test in 2023 | Kenneth Rogoff

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he fact that the world did not experience a systemic financial crisis in 2022 is a minor miracle, given the rise in inflation and interest rates, not to mention a massive increase in geopolitical risk.

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PESTEL Analysis EXPLAINED | B2U | Business To You

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Des méthodes simples et manuelles :

Recherche d'informations dans la presse, sur internet, brainstorming, etc.

Des méthodes plus sophistiquées :

L'intelligence économique : c'est l'ensemble des activités coordonnées de collecte, traitement et diffusion de l'information utile aux acteurs économiques, en vue de son exploitation

La prospective : c'est une démarche qui vise à se préparer à l'avenir en élaborant des scénarios possibles sur la base de données disponibles.

Exemples : les recherches de Michel Godet du CNAM.

Des outils de prospectives

http://www.laprospective.fr/methodes-de-prospective.html

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All organisations are included in Globalisation.
External Analysis goals consists in typing of the mains variables of the economic's environment.
-Ability to assess an organization’s position in relation to its environment.

-Know how to distinguish the different dimensions of an organisation's external environment.

-Know how to identify macro environmental trends and understand their impact on the company.

-Be able to identify the different competitive forces that influence a sector of activity.

-Ability to define and map different strategic groups within the same business line.

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https://www.iris-france.org/145498-oil-tsunami-the-shock-then-the-crunch/

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Stock Market Slides Amid Fears Coronavirus Outbreak Could Get Worse

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Une analyse PESTEL de l'industrie pétrolière

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Une analyse PESTEL de l'industrie pétrolière

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Un exemple de matrice PESTEL

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Covid is now contaminating Europe's democracy

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Covid is now contaminating Europe's democracy

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https://www.theguardian.com/world/commentisfree/2020/apr/01/coronavirus-contaminating-europe-democracy-viktor-orban-seize-more-power

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https://www.youtube.com/watch?v=VDTdXDDzJ1k

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https://www.youtube.com/watch?v=TsWNc9BusJ4

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The Biggest Military Budgets As A Share Of GDP In 2018

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Ce document est à utiliser avant le relevé d'analyse

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A website with Pestel analysis free templates

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A website with Pestel analysis free templates

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http://www.freeonlinetemplate.com/free-management-templates/pestle-analysis/pestle-analysis-free-templates/

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https://perspective.usherbrooke.ca/

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https://www.banquemondiale.org/

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https://www.wto.org/indexfr.htm

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https://www.un.org/fr/

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https://www.transparency.org/en/#

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https://www.ilo.org/global/about-the-ilo/who-we-are/international-labour-office/lang--fr/index.htm

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The crisis we are crossing today is a social, democratic, geopolitical and environnemental crisis and i general terms, crisis of inéqualities, powerty and discrimination.

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L'Islande Championne du monde de la parité

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En paysage ...

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What is NATO, why does it still exist, and how does it work? [2020 version]

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En portrait pour ceux qui préfèrent...

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Global Pandemic: Taking Geopolitical Risk Seriously

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Building Resilient Supply Chains | The COVID-19 pandemic has highlighted that globalisation is a delicate and vulnerable process.

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The Russia-Ukraine war has highlighted once more that geopolitical risks have significant impacts on the investment community, with some commentators going so far as to label them "the number one global corporate risk." Geopolitical risks are associated with a range of international conflicts or tension.

These conflicts and tensions can also be intra-national, involving states or non-state actors - for example civil war, coups d'état, and other violent changes of government. They significantly impact global trade relations and pose major challenges to financing and conducting business in a given country or region. These risks thus threaten the financial and operational stability of companies around the world.

While for some the Russia-Ukraine war came as a 'black swan' event, others argue that Russia's unlawful annexation of Crimea in 2014, as well as recent increased military exercises by NATO members and non-members in the west and Russia and Belarus in the east, could have been red flags. The Foreign Policy Research Institute noted in August 2021 that " tensions between Russia and NATO are increasing." The present war is a reminder of the hazards of conducting business in or moving operations to at-risk countries and regions. Monitoring such risks is crucial to safeguard businesses and investors from potential financial fallout.

This paper demonstrates how a country-risk analysis using the ISS ESG Country Rating presents a new opportunity for investors to evaluate such geopolitical risks.

Geopolitical Risks and Their Impact on Financial Performance

Almost 1,000 companies and multinational corporations have already decided to curtail operations in Russia or withdraw completely from the Russian market following the country's invasion of Ukraine. This decision has often come at a great cost to the business.

For example, Adidas reported that cutting all sales in Russia will cut 1 percent from its expected revenue growth this year, while IKEA is estimated to lose around 4 percent of its total retail sales by leaving the country. Also, McDonald's decided to completely exit the country by selling its Russian business, which according to estimates will result in a write-off of almost $1.4 billion.

Russia is not the only current example of geopolitical events leading to financial losses. Due to the violent coup d'état in Myanmar in February 2021 and the subsequent political instability in the country, several major corporations withdrew from Myanmar. Although coups d'état often seem to occur suddenly, prior events in Myanmar could also have been interpreted as red flags. As early as a year prior to the coup, in 2020, the NGO Freedom House changed the country's classification from "partly free" to "not free" - a category reserved for undemocratic, repressive, autocratic, and authoritarian regimes. The change was due to increased conflicts between the military and ethnic minority groups. The NGO also noted that during this year the political transition from military dictatorship to democracy stalled.

Both events provide examples of why businesses and investors may wish to monitor geopolitical events thoroughly when considering the risks associated with their countries of operation.

Conducting a Country-Risk Analysis to Avoid Potential Geopolitical Risks

Geopolitical risks often arise due to increasing political instability and a decline in commitment to the international rule of law, frequently resulting in violent conflicts. All these conditions are covered in the Governance pillar of the ISS ESG Country Rating.

Rating results in Figure 1 demonstrate that countries with a more democratic political system are also less often involved in violent or non-violent conflicts. Such countries are thus less risky from a geopolitical perspective. The assessment of the political system of a sovereign state includes the most important good governance principles: whether a country allows free and fair elections; whether the judiciary is independent; and the level of the rule of law within a country.
Figure 1: States with Less Democratic Political Systems are More Frequently Involved in Conflict

Source: ISS ESG 2022
Similarly, countries categorized as "free" by Freedom House also score considerably better in the Governance pillar of the ESG Country Rating than countries categorized as "not free" or "partly free" (Figure 2). The Freedom House Index is not part of the assessment of the Governance Pillar; thus, these results are not distorted due to double counting.
Figure 2: Governance Scores of Countries Classified by Freedom House as "Not Free," "Partly Free," and "Free"

Source: Freedom House, ISS ESG 2022; score on a scale of 1.0 (worst grade) - 4.0 (best grade)
Minimizing geopolitical risks thus involves incorporating factors such as democracy, the rule of law, and government accountability, as well as human rights, discrimination, military expenditures, and evaluation of conflict involvement - all of which can be assessed using the ISS ESG Country Rating. Including such factors may have tempered some investor losses in Russia, and at the same time made for more ESG-oriented global portfolios.

Additionally, significantly limited or violated civil rights may well be interpreted as red flags by investors and corporations. Investors and businesses may choose to respond by introducing even higher due diligence standards to ensure the well-being of employees and local stakeholders. Conducting a thorough country-risk analysis that looks at democratic principles and the safeguarding of human rights, including protections against discrimination, can support investors and businesses in identifying problematic countries of operation. The ISS ESG Country Rating is available as a resource in conducting such analyses.
Explore ISS ESG solutions mentioned in this report:

Access to global data on country-level ESG performance is a key element both in the management of fixed income portfolios and in understanding risks for equity investors with exposure to emerging markets. Extend your ESG intelligence using the ISS ESG Country Rating and ISS ESG Country Controversy Assessments.

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Country-Risk Analysis - A Tool to Assess Geopolitical Risks

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The Russia-Ukraine war has highlighted once more that geopolitical risks have significant impacts on the investment community, with some commentators going so far as to label them "the number one global corporate risk." Geopolitical risks are associated with a range of international conflicts or tension.

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geopolitics - what -First part- politics