How PRR Works

PRR connects political events to firm-specific business outcomes by comparing what happened, which firms were plausibly exposed, and how market-implied firm value responded.

The process

1

Map the firm

Build a structured profile of where the firm operates, sells, sources, and depends on government decisions. This creates a multi-dimensional exposure footprint across countries, sectors, and supply routes.

2

Classify atomic events and optional scenario families

Each political-risk event is tagged with a date, severity, target countries, and a risk channel such as sanctions, trade policy, regulation, conflict, nationalization, or market dislocation. Events remain atomic. Related events can also be tagged into scenario families, such as U.S.–Iran escalation or South Africa sovereign stress, without collapsing them into one event.

3

Measure market-implied firm value response

For each firm-event pair, PRR computes the market-implied firm value response: how much the firm's value moved relative to its benchmark in the days after the event. This is the raw signal. Public equity response is the first measured outcome because it is observable and comparable; the same framework can test other firm-level outcomes such as credit spreads, project delays, claims, margins, or contract awards.

4

Test firm-level and cohort-level patterns

PRR asks: across all events of this type, do firms with higher exposure consistently respond differently? Statistical tests, robustness checks, and cross-validation separate real signal from noise. PRR also tests whether firms move together in empirical response cohorts, helping distinguish isolated signals from shared political-risk transmission patterns.

5

Grade evidence and disclose uncertainty

Each firm-risk-channel pair gets an evidence grade based on statistical strength, robustness, and consistency. Strong signals get used for diligence; early signals flag areas for deeper review. Where evidence is thin, PRR says so — abstention is a feature, not a gap.

6

Use signals for decisions

Validated signals inform diligence, underwriting, portfolio review, and scenario design. Each signal carries its evidence grade, direction, cohort context, and recommended use — structured for integration into existing risk workflows.

What makes PRR different

Firm-specific, not country-level

Country risk says where trouble is. PRR says how it transmits to a specific firm through specific channels.

Evidence-led, not scorecard-led

Every signal traces back to observed firm value responses to real political events, with interpretation separated from the measured pattern. No surveys, no sentiment scores.

Honest about gaps

Where evidence is thin, PRR says so. Abstention is a feature: it tells you where more diligence is needed, not less. PRR evidence is observational. It identifies repeatable firm-level transmission patterns; business-model explanations are plausible interpretations, not causal proof.

Worked example — Capstone Copper

The same process described above, shown step by step for one firm and one risk channel. Scroll horizontally through the workflow, then see how PRR returns different answers for different firm-event pairs.

The result is an event-to-business-risk map: where evidence is strong, where it is early, and where more diligence is needed.