Disastrous domino effect in Europe

All the leading business media outlets reported yesterday that the price of natural gas in Europe has sharply risen by 40 percent, which is a sign that a chasm of energy uncertainty and insecurity could once again open beneath the old continent.

While the apparent reason for the surge in natural gas prices is prosaic - a strike by workers at an LNG plant in Australia who are dissatisfied with an average wage of around $3,000 (according to the Australian Bureau of Statistics) - the true reason for the new shock is a geopolitical conflict, namely the drastic reduction in natural gas supply from Russia. Therefore, the gas price increase is essentially the realization of accumulated political risk.
And political risks - including not only the showdown between the West and Russia or tensions in relations with China but also the enactment of a series of controversial decisions in public policies - are increasingly impacting business operations. This year's highly regarded Oxford Analytics study revealed that 100 percent of major global corporations were working to enhance their political risk management capabilities, while 54 percent increased investments in political risk insurance or financially protected themselves against political risks.
European companies are the hardest hit. Globally, 60 percent of companies in the survey reported a negative net impact from the conflict in Ukraine, with Western European companies estimating direct or indirect losses in 86 percent of cases due to this political risk. Only 33 percent of American companies assessed that political risk was causing them net damage.
These are substantial percentages across the board that unveil the true scale of the planetary business drama fueled by inflated political risks....