The Geopolitical Risk Index
A news-based measure of adverse geopolitical events and associated risks (Caldara & Iacoviello, 2022), indexed to a base-period average of 100. The threats and acts sub-indices decompose anticipation from realisation. Higher readings are associated, at the firm level, with lower investment and heightened downside risk — the empirical basis for treating it as a deal overlay.
Exposure Overlay
Set the sector composition of a target, portfolio or mandate. Each sector carries a geopolitical-risk beta — its historical sensitivity to movements in the index. The console returns an exposure-weighted risk signal at the current reading, and under a chosen historical stress scenario.
Dual Register — Risk vs Economic Coercion
The composite GPR captures conflict-driven risk. A second register — geoeconomic risk (coercion through trade, investment and financial channels: sanctions, export controls, screening, supply-chain weaponisation) — moves on a different rhythm and is the register most relevant to investment-screening mandates. The console holds a slot for a geoeconomic series (GER) loaded alongside GPR; absent one, the panel below frames the distinction.
Method & Sources
The index
The Geopolitical Risk Index follows Caldara & Iacoviello (2022, American Economic Review): a monthly count of newspaper articles discussing adverse geopolitical events, normalised to a base-period average of 100, with threats and acts sub-indices. The authors document that higher geopolitical risk foreshadows lower investment and employment and is associated with firm-level downside risk - the property Q-GPR exploits by mapping the index onto sector exposures.
The overlay
Each sector carries an illustrative geopolitical-risk beta: the elasticity of that sector's investment-risk profile to a one-standard-deviation move in the index. The exposure-weighted signal is the portfolio beta applied to the current reading's deviation from its long-run mean; the stress scenario re-evaluates the same portfolio at a historical peak. Betas are calibration placeholders pending estimation on sector return/spread data.
Dual register
Geopolitical risk (conflict-driven) and geoeconomic risk (coercion-driven) are distinct measures with distinct dynamics; recent work constructs newspaper-based geoeconomic-risk indices benchmarked against GPR, EPU and trade-policy-uncertainty indices. Q-GPR is built to carry both registers - the geoeconomic slot is the one most aligned with the FDI-screening and outbound-control mandates elsewhere in the suite.
Data mode
- Dual mode. The console ships with an illustrative monthly series reproducing the historical shape of the index (major spikes at recognisable events) for demonstration. Loading the published monthly file - via the header Load data button (CSV or JSON), or auto-detected as q_gpr_data.json beside this file - switches the series, readouts and overlay to real values and stamps the vintage in the header.
- Published GPR data: Caldara & Iacoviello, matteoiacoviello.com/gpr.htm (monthly, public). A geoeconomic series can be supplied in the same file under a ger column/key to activate the dual register.
- Sector betas are illustrative in both modes and clearly labelled; production release estimates them from market data. Nothing in this console constitutes investment advice.