The Fat Tail
Ian Bremmer president, Eurasia Group explains how politics matters at least as much as the economic fundamentals when it comes to global markets. (Apr 2, 2009 at the RSA) Chair: Luke Johnson, chair, RSA In recent years, investors have learned the hard truth that in the international economy, politics often matters at least as much as economic fundamentals for the performance of global markets. Too many companies and investors haven't yet learned to read the warning signs: their expertise lies much more in economics than politics, and the temptation is to hope that highly volatile situations such as the 2008 Georgia-Russia confrontation will be few and far between. In a new groundbreaking book The Fat Tail, Ian Bremmer and his co-author Preston Keat, two of the world's leading figures in political risk management, identify the wide range of political risks that global firms face - risks that stem from great power rivalries, terrorist groups, government takeover of private property, weak leaders and internal strife, and even the "black swans" that defy prediction. These scenarios - and their catastrophic effects on business - happen much more frequently than we imagine. On the curve that charts both the frequency of these events and the power of their impact, the 'tail' of extreme political instability is not reassuringly thin but dangerously fat.