"Political risk has entered our vocabulary," writes Ian Bremmer pointing to the fiscal cliff, the eurozone crisis, and the turmoil in the Middle East.
Every year, Bremmer, the head of Eurasia Group, publishes a list of the top 10 risks the world faces. He also includes a couple of red herrings of which we should be mindful.
Believe it or not, Bremmer actually thinks that the world may be a little too worried about what's going on in geopolitics.
"Looking to 2013, political risk in the developed world is now overstated," he writes. "Despite the chaos in Congress--which we'll surely see much more of in the coming year--concerns about the fiscal cliff in the United States have been overplayed. So too the fragmentation of the eurozone. And the impact of continued zero growth in Japan."
But this doesn't mean we should be dismissive of the risks.
What follows are Bremmer's top 10 risks for 2013, key excerpts from his report, and a list of the red herrings.
Click Here To See The Risks And Red Herrings >
Follow the Eurasia Group on Twitter: @EurasiaGroup.
1 - Emerging Markets: Not less risky
"Emerging markets will still have more volatility and instability than the advanced industrial democracies. Some still make good (if not safe) bets for the same reasons they have in the past--outsized growth potential makes "tail risk" more acceptable, but the era of emerging market abundance is finished. So in 2013, it's critical to understand that emerging market downside differs wildly from country to country, and in many of them, in marked contrast to developed markets, that risk is "unbounded.""
Bremmer breaks down the emerging market into three categories: becoming developed, still emerging, and backsliding.
Source: Eurasia Group
2 - China Vs. Information
"Over the past few months, we’ve seen the implications of an information society growing exponentially more rapidly than most expected. In the United States, nobody has the privacy they used to. Not New York residents with gun licenses having their addresses published after the Newtown tragedy; not ever larger numbers of leaders (CIA director David Petraeus and a host of congressmen) suddenly ousted following scandals that broke online; not Facebook CEO Mark Zuckerberg's sister randi when private family photos get posted online.
In the developed world, that's an annoyance, but the same trend in China has far more serious implications. In a Chinese economy that's increasingly information driven, a larger, better educated middle class needs access to information at work and expects it at home. Some of that info is directly undermining the political legitimacy of China's top leaders."
Source: Eurasia Group
3 - Arab Summer
"Rising tensions over Iran’s confrontation with Israel and the west are significant enough to merit their own top risk. But beyond Iran, the Middle East is now plagued with various overlapping tensions: sectarianism, especially an increasingly violent confrontation between Sunni and Shia both within and between countries; rising extremism, especially the resurgence of Sunni extremism in the form of jihadist and al Qaeda-related groups; regional great power tensions, as the traditional western powers, especially the united states, remain mainly on the sidelines and new actors jostle for influence; and continued political tension and the lack of economic progress in the states that were at the forefront of the “Arab spring."
Source: Eurasia Group
See the rest of the story at Business Insider
Please follow Money Game on Twitter and Facebook.