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Political risk in the natural resources sector

By Graham Knight and Stuart Ashworth | January 26, 2021

Our Natural Resources Executives have worked with Oxford Analytica to provide in-depth analysis of the political risks found in the Natural Resources sector.
Credit and Political Risk
Risque de pandémie

Those companies in the oil and gas and mining sectors that have thrived over the long term have inevitably become adept at managing through cycles. This year’s cycle, however, has been crueler than most.

…during the last global recession, in 2008, more than 80% of the world’s economies recorded positive economic growth.1

To put some figures behind that assertion: during the last global recession, in 2008, more than 80% of the world’s economies recorded positive economic growth.1 While North America and Europe struggled with the aftermath of the global financial crisis, many emerging market countries shrugged off the downturn. Some of these countries, such as India, were relatively insulated from international economic shocks; others, such as China, implemented aggressive economic recovery packages.

In 2020, by contrast, of the 192 countries for which the IMF produces economic forecasts, only 13% are expected to avoid economic contraction. The economic shock wrought by the pandemic has proved to be “global” in an unprecedented way, and in global commodities markets, the impact has been acute.

And yet, even as natural resources companies struggle to manage a dramatic contraction in demand for their products, there have been a few green shoots. Some commodities, such as gold, have surged as a store of value.2 Other mining commodities have shown signs of strengthening on the back of economic recovery in Asia3.

We asked Oxford Analytica to conduct research into the political risks facing oil and gas and mining companies during these unprecedented times.

We asked Oxford Analytica to conduct research into the political risks facing oil and gas and mining companies during these unprecedented times. Oxford Analytica convened a panel of external affairs and risk management professionals at five of the world’s largest natural resource firms. Oxford Analytica then conducted in-depth interviews with these professionals, to produce the risk radar that appears in the next section, and commissioned scholars in its global expert network to produce peer-reviewed essays on two of the top risks the executives identified: “strategic competition between Chinese and Western companies;” and “natural resource fiscal policy after COVID-19.”

As you will see, China proved to be top of mind for the panelists, accounting for two of the top five risks on our list. Perhaps China’s dominance is unsurprising. In a sense, 2020 was China’s year. The Year of the Rat began in tragedy, as the pandemic exploded in Wuhan and threatened to overwhelm the city’s medical system. And yet, by the end of 2020, China appeared to have gained control of the virus and restarted its economy – even as many Western countries continued to struggle. Indeed, despite much talk of “reshoring,” and an acrimonious trade dispute with the United States, during the first half of 2020 China’s share of world exports actually rose.4 Say this for China’s government: it can manage adversity.

What risks will natural resource companies face as Chinese and Western firms engage in strategic competition? What risks might arise from geopolitical tensions between China in the West? What political risk perils might be lurking “under the radar?” We hope you will find Oxford Analytica’s findings on these subjects, which appear on the pages that follow, to be useful.

We sincerely thank the Oxford Analytica contributors who authored the following essays, but most of all we thank the expert panel of natural resource executives who guided the research for their time and insights.



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Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In the United States, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast, Inc. and Willis Towers Watson Insurance Services West, Inc.

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Director of Political Risk Analytics, Financial Solutions

Sam Wilkin is WTW's director of political risk analytics, meaning he constantly monitors emerging and existing politically-linked threats to companies. He also leads WTW's annual political risk survey.


Chairman of Global Natural Resources

Head of Broking and Market Engagement & Head of Credit and Political Risk for Corporates

Stuart Ashworth is Head of Credit and Political Risk Insurance for Corporates and Head of Broking and Market Engagement for WTW's Financial Solutions team. Prior to this he spent nine years in Singapore, looking after WTW business covering Singapore, Hong Kong, Japan and Australia.

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