There has been an upsurge in civil unrest globally, with this unrest impacting the smooth flow of business operations. Companies have been alerted to the risks civil unrest poses, as they have been identified as one of the main political risk exposure for businesses, states Global Risk Dialogue from Allianz Global Corporate & Specialty (AGCS).
The group urged companies to address political violence risk as part of its business continuity planning.
It noted that businesses suck as retail are more exposed to the risks brought about by civil unrest.
Speaking on the matter, the Head of Global Political Violence and Hostile Environment Solutions at AGCS, Bjoern Reusswig, said, “Fortunately, large-scale terrorism events have declined drastically in the last five years.
“However, the number, scale and duration of riots and protests in the last two years is staggering and we have seen businesses suffering significant losses.
“Civil unrest has soared, driven by protests on issues ranging from economic hardship to police brutality which have affected citizens around the world.
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“And the impact of the Covid-19 pandemic is making things worse – with little sign of an end to the economic downturn in sight, the number of protests is likely to continue climbing.”
The group also stated that civil unrest incidents threaten company revenue, and cause physical damages, while also interrupting the smooth run of businesses, as observed in the Allianz Risk Barometer 2021.
Prior to 2018, ‘political risks and violence’ had been mostly off the list of top 10 risks of businesses.
A study by Verisk Maplecroft shows that 75 countries are expected to experience an increase in protest in 2022.
And over 30 of these protests, predicted to come out of Europe and the Americas, will see significant activity.
The report also highlighted the effects of these unrests on insurance companies. It said that the US insurance industry, for example, saw nothing less than $1 billion to $2 billion insurance claims in the wake of George Floyd’s death – the African American killed by police officers in 2020.
It went further to state that even when businesses do not get affected directly, revenues of these companies take a hit when surrounding areas are cordoned off for an extended period.
“Unfortunately, the risk of riots and violence is likely to become more acute because of Covid-19,” says Michael Stone, a risk consultant for AGCS North America.
“The measures governments have used to combat the coronavirus have had a significant socioeconomic impact and frustration is growing in large population segments.
“The impact is particularly evident in the US, where the social safety net is not as comprehensive as elsewhere. People are concerned.
“Job, health and income security are all gone. They’re more likely to demonstrate and have a shorter fuse, so it isn’t surprising that anti-lockdown demonstrations can turn violent.”
Business Continuity Planning
Businesses are urged to prepare ahead against political violence risks, especially businesses in sectors like retail.
A frequent review of insurance policies by companies should also be reviewed, advised AGSC.
Reusswig said, “Previously this coverage was seen as a ‘nice to have’ for clients and ‘nothing to be overly concerned about’ by insurers.
“However, this has changed since 2018, as both the frequency and severity of these events has increased significantly. We see growing interest and demand for political violence covers from companies.”
