AGCS highlights the growing threat from political risk related violence
- Published: Wednesday, 01 March 2023 08:55
In a new report ‘Strikes, riots and civil commotion outlook 2023’, Allianz Global Corporate & Specialty (AGCS) identifies five factors that is says are likely to power ongoing incidences of political risk related violence around the world.
Anger over growing social inequality and the cost-of-living, foundering faith in governments and institutions and increasingly polarized politics, together with a rise in activism and environmental concerns, are the main factors expected to fuel ongoing incidences of strikes, riots and civil commotion (SRCC) around the world, according to the report. The heightened SRCC risk environment means businesses need to remain vigilant about the different threats such activity can pose. In addition to buildings or assets suffering costly material damage, operations can be severely disrupted, resulting in significant loss of income.
Civil unrest risks rose in over 50 percent of countries between Q2 and Q3 2022 alone, according to the Verisk Maplecroft Civil Unrest Index - out of 198 countries, 101 saw an increase in risk. Since 2017, more than 400 significant anti-government protests have erupted worldwide. It is unsurprising then that ‘political risks and violence’ ranks as a top 10 peril in the Allianz Risk Barometer in 2023. While the Ukraine war is a major factor in this ranking, the results also show that the impact of SRCC activity ranks as a political violence risk of top concern with a combined score of almost 70 percent Unrest is now spreading more quickly and widely thanks in part to the galvanizing effect of social media. This means multiple locations can be impacted, potentially resulting in multiple losses for companies. Such events are also lasting for longer - almost a quarter of the 400 significant anti-governments protests since 2017 were in excess of three months – helping to ensure financial costs are mounting. Reported damages from just six civil unrest events around the world between 2018 and 2023 resulted in at least $12bn in economic/insured losses.
“Incidences of strikes, riots and civil commotion have not only increased in recent years, they are also becoming more intense and catastrophic. These types of events are making our era one of uncertainty,” says Srdjan Todorovic, Head of Political Violence and Hostile Environment Solutions at AGCS. “We have seen multibillion-dollar loss events in the US, Chile, and Colombia. The threat is changing, and although many of the reasons for it are universal – whether economic, political, or environmental – it can play out differently in different regions, with various levels of violence and disruption. Operational and security management within organizations should view the current climate as a catalyst for evaluating best practices and policies around preparing locations and employees for potential civil unrest and building resilience.”
Five risk drivers of civil unrest
In ‘Strikes, riots and civil commotion outlook 2023’, AGCS’ political violence team highlight the five main factors they expect to power further SRCC activity in 2023 and beyond. These are:
- The ongoing cost-of-living crisis: although inflation is now thought to have peaked in many countries the after-effects continue to take their toll. Just over half of protests globally in 2022 were triggered by economic issues, and public confidence in the financial future is shaky.
- Distrust of governments and institutions: governments thought to be corrupt or perceived to have been in power for too long can bring people out on to the streets. Economic grievances about food, fuel, pay, or pensions can expand from issues-led demonstrations to wider anti-government movements.
- Increasing polarization: political divisions are stoking tensions around the world undermining social cohesion and escalating conflict. Polarized opinions can become particularly entrenched on social media and in some countries such polarization is turning violent.
- A rise in activism: In recent years, movements that have been significantly galvanized by social media.
- Climate and environmental concerns: where governments are seen to row back on climate-change progress, there could be unrest. Businesses that are deemed to profit excessively from fossil fuels while many people struggle could also be targeted.