You only have to watch the stock markets drop hundreds of points in a few hours or a single day to know that something is wrong or maybe about to happen that’s unnerving investors. News reports online and on air can help explain the drama, as they did Tuesday when turmoil in Italian politics slashed more than 300 points from the Dow Jones industrial average. But what will happen next? Will the panic continue or abate, as it did on Wednesday, or are there other, perhaps even bigger, risks on the horizon?
To help answer such questions and anticipate potential future hazards, BlackRock has just launched the BlackRock Geopolitical Risk Dashboard (BGRD), a global market barometer of the major geopolitical risks confronting financial markets.
The list is developed by gauging the market’s attention to geopolitical risks via analyses of financial news stories, analyst reports and tweets associated with geopolitical risks. Then BlackRock calculates the frequency of words that relate to geopolitical risk, adjusted for positive and negative sentiment in the text of articles, tweets and analyses, and, after assigning a heavier score to analysts’ reports, assigns an overall score to the BlackRock Geopolitical Risk Indicator index (BRGI). The higher the index, the more financial analysts and media are referring to geopolitics.