Eurozone risk management gets political

Deposit flight from Greek banks in the aftermath of the country’s May elections provided a stark reminder of the growing importance of political risk in Europe, a subject banks have had to swot up on in recent years. By Michael Watt, with additional reporting by Joe Rennison

Political risk is a nebulous term that occasionally achieves painful clarity – for example, during the weeks following Greek elections on May 6. With the country’s second bail-out signed off by eurozone finance ministers two months earlier, the Greek electorate had a chance to make a statement about the accompanying austerity conditions – it became a protest vote, draining power from the incumbent coalition government and threatening the country’s future as part of the eurozone (see box).

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