Acknowledgments x SECTION ONE Basic Building Blocks of Analysis CHAPTER 1 Introduction to Political Risk Analysis 3 1.1 Political Risk is Everywhere 3 1.2 Risk, Politics, Analysis: Defining Core Concepts 4 1.3 Why Take Political Risk? 7 1.4 Toward a More Rigorous Practice of Political Risk Analysis 7 Notes 9 CHAPTER 2 Approaching Political Risk Systematically 10 2.1 The Qualities and Consequences of Risk 10 2.2 Risks and Risk Events 17 2.2.

1 Terrain 17 2.2.2 First-Orderand Second-Order Effects 18 2.3 The Object of Risk 19 2.4 Cumulative Risk in a Context of Polycrisis 20 2.5 Building Systemic Risk Analysis 21 Notes 21 CHAPTER 3 Thinking Analytically About Political Risk 23 3.1 The Uses of Political Risk Analysis 23 3.2 Setting the Parameters for Political Risk Analysis 24 3.

3 Recognizing the Limits and Challenges to Political Risk Analysis 26 3.4 Methodological Standards 32 3.4.1 Useful 32 3.4.2 Theoretically Informed 33 3.4.3 Transparent 34 3.

4.4 Reliable 35 Notes 37 CHAPTER 4 The Building Blocks of Political Risk Analysis 39 4.1 Political Risk Analysis and the Scientific Method 39 4.2 Asking Good Questions 40 4.3 Developing Hypotheses 47 4.4 Considering the Evidence 50 4.5 Drawing Analytical Conclusions, Couched in Probabilistic Terms 51 4.6 Reappraising Our Analysis 52 Notes 52 SECTION TWO Framing Behavior: Preferences, Institutions, and Constraints CHAPTER 5 Leader Preferences, Beliefs, and Behavior 57 5.

1 Preferences and Beliefs 58 5.2 Political Identity and Political Preferences 59 5.3 Leader Personality as a Clue to Action 61 5.4 Profiling Leader Personality 62 5.5 A Political Profile of Donald J. Trump 68 5.6 FInal Considerations: The art of Understanding Preferences and Behaviors 73 Notes 74 CHAPTER 6 Institutions 76 6.1 Institutions, Organizations, and Incentives 77 6.

2 Institutions at Various Levels of Abstraction 79 6.2.1 Systems of Institutions: Limited-Access vs. Open-Access 79 6.2.2 Regime Clusters and Macro-Institutional Configurations 82 6.2.3 Emergent, Locale-Specific, and Institutional Configurations 89 6.

2.4 Institutional Rules for Policymaking 94 Notes 97 CHAPTER 7 Constraints 99 7.1 Key Arguments of the Constraints Framework 100 7.2 Political Constraints 100 7.3 Economic and Financial Constraints 103 7.4 Geopolitical Constraints 105 7.5 Constitutional and Legal Constraints 106 7.6 Considerations about the Constraints Framework 110 Notes 110 SECTION THREE Models of Political Risk CHAPTER 8 Descriptive Models of Risk 115 8.

1 Descriptive Models of Industrial Risk: FMEA and HAZOP 115 8.2 Descriptive Models of Organizational Risk: PESTEL and SWOT 116 8.3 Descriptive Models of Natural Risk: The Air Quality Index and the National Risk Index 118 8.4 Descriptive Model of Geopolitical Capacity: Global Monetary and Financial Profiles of States 121 8.5 Final Thoughts 123 Notes 123 CHAPTER 9 Political Risk Indices and Credit Ratings 125 9.1 The International Country Risk Guide 126 9.2 S&P Sovereign Ratings 128 9.3 Considerations about Indices and Ratings 130 9.

3.1 What are They Explaining? 130 9.3.2 Aggregation Method 131 9.3.3 Explanatory Variables 132 9.3.4 Objective and Subjective Measures 133 Notes 135 CHAPTER 10 Stakeholder Analysis 137 10.

1 Veto Players 137 10.2 The Lockwood Model 142 10.3 Static Stakeholder Analysis: The Prince and Bueno de Mesquita Models 145 10.3.1 A Tale of Two Presidents: Venezuela 2019 147 10.4 Dynamic Stakeholder Analysis 153 10.5 Considerations about Stakeholder Analyses 155 Notes 156 CHAPTER 11 Financial Market Signals 158 11.1 Basic Concepts for Understanding Markets 159 11.

2 Sovereign Debt Spreads as Signals 161 11.3 Credit Default SWAPS 162 11.4 Considerations about the use of Spreads 163 11.5 The Shape of Yield Curves 163 11.6 Exchange Rates as a Signal 165 11.7 Investment Baskets as a Signal 166 11.8 Commodities 167 11.9 Volatility Measures 167 11.

10 Political Risk Insurance 167 11.11 Final Considerations 169 Notes 170 CHAPTER 12 Surveys, Polls, and Electoral Forecasts 171 12.1 Public Opinion Surveys 171 12.2 Electoral Polling 174 12.3 Poll Aggregators 180 12.4 Electoral Forecasting Models 181 12.5 Combined Models 185 12.6 Final Considerations 186 Notes 186 CHAPTER 13 Crowd Prediction Systems 187 13.

1 The Wisdom of Crowds 187 13.2 The Delphi Method 188 13.3 Prediction Markets 190 13.4 Crowd Forecasting 195 Notes 198 CHAPTER 14 Early Warning Models 199 14.1 The Evolution of Early Warning Models 199 14.2 Databases and Data Challenges 201 14.3 Common Frameworks of Conflict Early Warning Models 201 14.4 Statistical Early Warning Models 204 14.

4.1 The Political Instability Task Force (PITF) 205 14.4.2 Violence Early Warning System (ViEWS) 206 14.5 Machine-Learning and AI-Implemented Early Warning Models 209 14.6 Final Considerations 212 Notes 213 CHAPTER 15 Scenarios 215 15.1 Shell and Scenario Analysis 215 15.2 First-and Second-Generation Scenario Analysis 217 15.

3 The Nuts and Bolts of Scenario Development 218 15.4 Considerations about Scenarios 225 Notes 225 CHAPTER 16 Wargaming 227 16.1 Gaming out Uncertainty 227 16.2 Types of Wargames 228 16.3 The Origins of Analytical Wargaming 229 16.4 Nuts and Bolts of Analytical Wargaming 231 16.5 Considerations about Wargaming 233 Notes 236 CHAPTER 17 Concluding Thoughts 237 References 239 Index 263.