Moore School hosts discussion with UBS Head of Political and Country Risk
While social, economic and political factors all contribute to a country’s financial instability, there seems also to be a global reason for financial problems. Such was the conclusion at a discussion held at the Moore School of Business Thursday.
Head of Political and Country Risk for UBS Preston Keat led a round table forum at the Moore School discussing instability in politics and business. In his lecture, “Staying Ahead of the Crisis: Political Risk and Strategic Investment”, Keat highlighted the risks in international finance and how politics contribute to their instability. He marks this as the “return of the political economy.”
Keat’s job at UBS is to forecast financial risks for other countries based on an analysis of current problems.
“You can’t make a good forecast if you don’t have a structure to see how this works,” Keat said when highlighting the in-depth process of predicting financial risks. “The way to think about stability is by considering all of the things that cause instability.”
Risks such as tripling tax rates and economic and social reconstruction are a few factors that affect the financial success of any country, he said. According to Keat, politics contribute to these default risks through sovereignty, transferring of funds and systematic counterparty.
“People say that these politicians are being stupid and irrational. No, they have identifiable interests that they will pursue,” Keat said in the argument, blaming politicians. Many political figures cannot reason for every risk that is for the improvement of their country, Keat said. However, they play an important role in fighting for stability.
Countries do not have the same stability they had last year, Keat said. Even the most highly ranked and stable countries have newfound problems. Keat highlighted that some of the solutions are some version of a political union, a budget, increasing bank mechanisms for sovereigns, slowing down and allowing for things to work out on their own without anyone focusing on them.
International finance doctorate student Xiaolan Zheng found the lecture insightful for her research.
“The lecture, I think, is very helpful to help understand the greater risks. He presented it in a way that I could use as a Ph.D. student,” Zheng said. “It gave a lot of background research on what’s going on.”
As far as America’s economic improvement, Keat stressed that the nation still has a long way to go before full recovery.
“I still think that there is a big risk of going back into recession — 40-percent chance,” Keat said. “Unemployment is pretty persistent. I’m not too optimistic about the economy right now.”
International business doctorate student Nick Bailey pointed out that Americans should consider multiple factors in other countries’ financial risks.
“They need to recognize qualitative and quantitative elements that can put the risks into countries, and doing business in other countries is not just a number, but there are a lot of other things going into it,” Bailey said.