Saudi Arabia has a brash young new crown prince who is directing economic and foreign policy. This will increase political uncertainty in the Middle East. The risks of confrontation with Iran are rising. The crude oil price is going to be subject to more volatility.

There isn’t a ‘one size fits all’ model for populism. It’s hard to identify in advance why social pressures morph into populist breakthroughs. Despite similar symptoms, risks can vary quite substantially from period to period and from country to country. This is the reason why the fashionable domino theory of global populism fell flat on its face.

Despite South Korean President Moon Jae-in’s latest efforts to cool matters with the North, it is going to be a tall order to de-escalate tensions. We remain of the view that diplomacy is past its sell-by date. The risk of conflict continues to be significantly under-priced by the market. Such a high impact and now high probability risk requires portfolio insurance.