Introducing Morning Consult’s Global Political Risk Ratings

Introducing Morning Consult’s Global Political Risk Ratings

Morning Consult is pleased to announce the launch of our Global Political Risk Ratings, a high-frequency political risk management tool covering 36 markets, with ratings released monthly for Morning Consult Pro subscribers and component ratings data available daily for Morning Consult Intelligence clients, including via API. Ratings are narrowly defined to reflect the degree of public approval of the incumbent chief executive and of their country’s trajectory in each rated market, and are associated with an increased likelihood of economic policy uncertainty and political unrest as a function of higher risk.

The newly launched ratings — which are modeled on sovereign credit ratings models — are intended to support data-driven risk management efforts in the context of corporate scenario planning, as well as portfolio management and investment decision-making, including by serving as quantitative political input into sovereign credit ratings. For public sector entities, the ratings can also be used to systematically assess stability issues in countries of concern. To the best of our knowledge, our ratings are the only high-frequency survey-derived sovereign political risk metrics available for enterprise use.

Why now? 

Amid today’s fraught global political landscape, companies and portfolio managers alike must increasingly contend with headwinds driven by domestic political polarization, rising populism and political unrest, and policy and electoral uncertainty the world over. Our newly launched risk ratings are intended to help clients efficiently and rigorously navigate these headwinds using systematic, streamlined, and readily comprehensible metrics that are intended to be accessible to a variety of stakeholders, ranging from analysts to the C-suite.

A new suite of tools for a volatile global political landscape

For clients seeking to do so, the newly launched ratings and companion risk management tools now available via Morning Consult Pro include the following:

• Global Political Risk Ratings Tracker: A one-stop shop for our latest ratings, ratings action (e.g. upgrades and downgrades), and related forecasts, along with interactive summary visuals by market and market group (updates monthly).
• Market Commentary & Risk Outlook (MACRO) Political Briefings: A monthly briefing providing our analytical assessments of ratings drivers, forward risk outlooks, and upside and downside scenarios and sensitivities (also available via the above tracker).
• A companion chartpack, trended data file with historical risk ratings, and a detailed Risk Ratings Definitions & Methodology Primer (all available via the above tracker page, with data access limited to Morning Consult Pro+ Subscribers).

In launching these tools, Morning Consult aims to provide our subscribers, clients and partners with a variety of opportunities to better understand and mitigate their political risk exposure — including by benchmarking risk profiles across markets where they do business or hold assets, and by measuring and tracking their average risk exposure globally or by region — and subsequently convey that information to stakeholders and decision-makers. 

Differentiators

Existing quantitative political risk metrics exhibit a variety of limitations, including being issued on a low frequency, insufficiently responsive to political developments (i.e. flat-line syndrome), subject to a high degree of analyst influence, or overly complex in design. The latter commonly arises due to heavy reliance on composite indexes with numerous pillars, sentiment analysis algorithms that are difficult to parse, and metrics derived from social media listening that are often noisy and pose challenges for signal identification.

Our metrics overcome these limitations: Our newly launched ratings are high-frequency, responsive, and derived systematically from retroactively stable survey data that is both transparent and straightforward to interpret.

For clients needing to make data-driven decisions in the moment, high-frequency data that is responsive to political developments is a must, as is the certainty afforded by our consistent construction of risk metrics over time. Stability in ratings construction and our reliance on standardized data inputs similarly enables clients to infer that when changes in risk ratings occur, they are due to shifting fundamentals on the ground, more so than subjective differences of opinion among analysts. Our reliance on public opinion data to construct the ratings as opposed to more opaque methods — alongside our reliance on a standardized letter-based ratings scale — similarly facilitates the ratings’ accessibility for technical and non-technical stakeholders alike, with our companion MACRO Political Briefings providing the color behind why ratings move when they do, and where they are headed.

Use cases 

Corporate and financial services applications

Our newly launched ratings support a variety of private sector use cases. For corporate risk monitoring, we advise consulting the ratings on a monthly basis to benchmark risk profiles across countries where you maintain a commercial presence or route supply chain activity, and assess where risk profiles have shifted the most/least. In parallel, we advise consulting our monthly companion MACRO Political Briefing to understand the drivers of these shifts, and for our forecasts of where things are headed over the next six months. Clients with access to the underlying ratings data (Morning Consult Pro+ subscription required) can also assess company-wide or business line-specific risks by measuring and tracking average risk exposure across all markets globally where you do business and/or by region. 

For financial services firms and ratings agencies, our risk ratings offer a novel opportunity to incorporate high-frequency political inputs into both systematic and discretionary investment decision-making and portfolio allocation strategies as well as into sovereign ratings models, such as by using our baseline ratings for monthly or quarterly rebalancing or leveraging our higher frequency ratings component data to price in risk in near real-time.

Across both sets of applications, consulting our ratings alongside companion data products intended to support policy sentiment tracking — including our U.S. China-Relations Tracker, our U.S. Foreign Policy Tracker, our Global Corporate Purpose Tracker, and our monthly Global Policy Outlook Report Series — provides a holistic outlook on both political and policy risks in the world’s largest consumer markets along with the most investible ones. 

Public sector applications

For public sector entities monitoring political risk and stability dynamics in countries of concern, our ratings offer a standardized, holistic metric for doing so, alongside supporting data products including our Global Leader Approval Tracker, Global Soft Power Rankings, Global Political Polarization Rankings, and U.S. Reputation Tracker. 

Macro insights

Among other macro insights, our ratings reveal that markets commonly assessed to be the most creditworthy and the safest economic bets for multinationals and portfolio managers alike often have higher political risk. Continental Europe, marked by low risk ratings for France and Germany, are good examples of this. 

While there are exceptions to the rule — like the United Kingdom, which saw a boost in ratings coinciding with the seating of the new Labour government in 2024 — our ratings also come down on the side of emerging markets in the ongoing debate about whether developed markets have replaced them as the riskier bet for business and investment.

There are both political and economic reasons why this may be the case. With respect to the former, developed markets are increasingly argued to be plagued with political dysfunction that leads to erratic policymaking and government instability — patterns historically associated with less wealthy countries. Average trends in our data among each market group over the past several years are highly suggestive on this front.

On the economic side of the ledger, it may also be the case that residents of developed countries may simply be more dour about the state of political affairs at home because they can afford to be. By contrast, among residents of less advanced markets, for whom the severity of pocketbook considerations may be more acute and where state capacity is often diminished, rosier evaluations of politics may predominate simply because the public perceives that their political leaders have fewer levers to pull and give them a pass.

For corporates and asset managers whose business lines and portfolios require attentiveness to the political side of these dynamics, our ratings provide a novel set of tools to assess them in the aggregate, in addition to monitoring high-profile country-specific developments. Per our inaugural MACRO Political Briefing, these include 2024 U.S. presidential election dynamics — which recently triggered a U.S. upgrade — and a variety of downside risks in Indonesia, Mexico, and Thailand amid this year’s global election supercycle.

Questions?

For clients and prospects seeking to leverage our ratings to inform their risk management efforts, we’d love to chat further about how to do so. Contact us for a ratings walkthrough, or to speak with one of our global political analysts about market-specific developments.