The country risk management industry has grown considerably in the past two decades to become a multibillion-dollar business. Country Risk Solutions (CRS) has conducted research to determine the breadth and depth of the industry, and reviewed a total of 198 firms in 94 locations by foundation year, location, and type of business conducted, with some surprising results. There are clearly more organizations, products, and service offerings in the country risk management space than ever before, which is a great benefit to consumers of the product and the risk management business alike. But it also raises some issues about how the industry evolves from here.

As noted below, there has been significant growth in the number of firms focused on the space since the 1970s, peaking in the previous decade. This coincides broadly with the rise of the Internet, the free flow of information, instant global communications, the expansion of the political risk insurance (PRI) industry, and other factors which have created a landscape conducive to such growth. Moreover, the world has become an increasingly riskier place in which to do business and service providers have risen to the occasion.

Those who work in the space will not be surprised to learn that 26% of firms surveyed are based in London, but Washington D.C. and New York tied for second place, each hosting 8%. A significant reason for the aggregation of firms in London is that it is the epicenter of the PRI business; insurance brokerage and underwriting firms active in PRI represent 47% of the total number of insurance firms surveyed. 27% of political risk consulting firms and 38% of all think tanks surveyed are also based in London. Consulting firms comprise 47% of New York’s and 38% of Washington’s totals, and they each host 22% of all information/intelligence firms surveyed.

Organizations active in country risk management tend to be spread relatively evenly among the consulting, information/intelligence and insurance businesses. The largest sector – insurance – accounts for 45% of the total, followed by consultancy (26%), information/intelligence providers (20%), and think tanks (5%).

While other firms were not included in the review, the survey permits some general conclusions to be drawn. First, there is clearly growing and sustained demand for all services provided in the space, which is consistent with the growth in global lending, trading, and investing in all parts of the world. Second, while the ‘centers’ of the sector are London, Washington, and New York, other parts of the world contain significant ‘clusters’ of country risk-related operations, such as the PRI business in Singapore and consulting firms in Dubai. Third, it is reasonable to expect that the sector will continue to grow, given the realities of risk associated with doing business around the world.

The implication for service providers is that an increasingly crowded space will become more so with time, forcing each to distinguish their offerings and comparative advantages from each other, placing pricing pressure on firms, and encouraging continued consolidation in the sector. For consumers, the smorgasbord of options can only grow, which is both a blessing and a curse in that it will require more time and resources to be devoted to differentiating which providers have the products and services best suited to their needs. This is already an issue for many consumers – particularly the lesser informed – as it can be difficult to discern the best match by product, price, and quality.

It was already the case a decade ago that the field had become so crowded that there was a lot of overlap among information providers. The continuation of that trend has forced some of them to more succinctly differentiate their offerings from that of their competitors. Some new entrants in the field are attempting to provide something unique to the marketplace, with varying degrees of success, using Artificial Intelligence to breathe new life into the prediction of future events, and their impact. In that regard, the growth in the space is forcing established players to reconsider how they do what they do, in order to remain competitive.

There can be little doubt that the country risk management marketplace has a bright future. Demand has driven an ever-expanding plethora of options for global traders, investors, and lenders, which has contributed to the growth in the global economy. The challenge for service providers in the space will be to continue to innovate and stay ahead of the curve. This will not be easy, given that accurate predictions about the future of a country – or indeed, global politics, economics, finance, and security – are an art rather than a science. That has always been the sector’s challenge, but the stakes are higher now than ever before for everyone involved in the space.

This article first appeared in LinkedIn.