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It was this increasingly complex environment that prompted The Hartford to launch its new Global Center for Specialized Insights this year. The center’s team of analysts has been tasked with helping underwriters and brokers navigate this period of heightened uncertainty.

“These experts are advising and consulting with our underwriters on how to navigate their portfolios, and with our business leaders on how to review their strategies and readjust to the inflation environment and geopolitical risk,” Adrien Robinson (pictured above), head of global specialty at The Hartford, he explained.

Shailesh Kumar (pictured below), head of economic and geopolitical risks at The Hartford, leads the team in its critical work.

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“Supply chains are disrupted and continue to affect businesses, while inflation remains a challenge. These are all some of the topics we can talk to our clients about to help them unlock more value and figure out how they want to manage their existing operations or market entry,” said Kumar. insurance business.

geopolitical vision

Companies in particular want to be aware of geopolitical risks, such as the conflict in Ukraine, as the economic repercussions of the ongoing violence reach far and deep into many lines of business.

“We are very focused on how this war is affecting the movement of goods,” Kumar said. “There are regions that no longer export and there are regions where import demand has increased. The cost of shipping goods has also increased due to rising commodity prices and continued dislocation since the pandemic.” He noted that since price pressures remain high for staples like food and energy, part of the center’s job is to draw clients’ attention to these trends.

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The center also rates dozens of countries on various dimensions of risk, highlighting areas of opportunity and challenges for companies. These reports track the individual risk profiles of countries, but Kumar emphasized that when working with clients, these scores are placed in a broader context. A company with significant exposure to Vietnam, for example, seeking insight into its political environment and business outlook should also consider its location and relationships within the Southeast Asian region.

“It is impossible to simply analyze a country independently. You can’t have a conversation about Vietnam unless we’re talking about China, the South China Sea, and what’s going on there,” Kumar said.

Charting the first-, second-, and third-order effects that clients can anticipate from an event also allows them to identify the risks at each stage, according to Kumar. He cited rising food prices as an example: “First, how does that filter into the performance of countries from a fiscal point of view, since countries have to pay more for food imports? What should we be aware of?

“Second, what does that mean then for the state of political violence around the world? Historically, food inflation has created challenges in countries. There have been numerous cases where high food prices have led to the collapse of governments or a revolution. There are already some indications around the world where there is some instability on that front,” Kumar continued.

“So we think beyond that: what does this mean for the geopolitical landscape five years from now? What does it mean for the rise of new centers of power around the world? How could that affect trade flows?

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Changes in globalization

The last few decades have been marked by almost unfettered globalization, but a realignment of the global world order is emerging, according to Robinson. The Hartford Global Specialty Insights Center is positioned to support business leaders during this volatile period.

“Companies may be thinking about what that realignment can do to the global supply chain, shipping routes, trade associations, economies and currencies. There will be adjustments as different factors emerge, but the world is moving more towards fractionalization and different types of political alliances. We can provide a lens to see how those scenarios will play out,” Robinson said.

The war in Ukraine is accelerating those shifts in global power, Kumar said: “The conflict has exposed flaws around the world. He has also highlighted the fact that many countries are looking to grow. The rise of alternative power centers, along with various policy and economic decisions made in the wake of the war, will likely fuel this effort.”

Some possible consequences of this shift in power include more localized trade and increased spending on national security. Trading partners may be more selective, which will affect trade flows, creating implications for maritime lines of business. This could also affect debt, financial difficulties and debt solvency.

“Today we are seeing some real cases, like Sri Lanka, which went into technical bankruptcy. This will have material implications for business lines of credit, for example,” Kumar said.

“All of these factors are ultimately linked, and this is the type of analysis and insight that we are trying to piece together for our clients. We are going layer by layer to find out what is happening at the country level and how that will affect you as a company.”

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Armed with this knowledge, clients can shop for the right insurance coverage. Robinson said: “If they’re looking to expand into one of those countries, they can come to us and get one of those policies, like political violence and terrorism, that will help alleviate some of this risk.”

“We are giving them everything they need to know from an intelligence standpoint. But then the underwriters also provide them with tangible solutions to help facilitate their entry into these markets,” added Kumar.