Some $13bn in economic and insured losses came from just seven civil unrest incidents in recent years, according to a report by Allianz Commercial on political violence and civil unrest.
Businesses are more concerned about political risks and political violence (PV) than they have been for many years, according to Allianz Commercial.
Security and supply chains have been rocked by ongoing international conflicts, the insurer noted, most notably in the Middle East and Ukraine, with security around the globe undermined by the impacts of civil war, lawlessness and organised crime.
Social unrest incidents around the world are on the rise, Allianz warned.
Anti-government protests erupted in 83 countries during 2023,including in seven countries that had not experienced major protests in the past five years, the paper reported.
This was driven by factors such as high inflation, wealth inequality, food and fuel prices, climate anxieties, and concerns about civil liberties or perceived assaults on democracy, the insurer observed.
“We anticipate further challenges to come as we move through 2024 and beyond, particularly around election related SRCC [strikes, riots, and civil commotion] events,” Allianz said.
“So many elections in one year raise concerns about the fuelling of populism and polarization, with tensions potentially playing out in heightened civil unrest,” the insurer added.
Disputed elections and climate related political activism were highlighted as likely causes of social unrest.
“The threat landscape is evolving. In previous years, large-scale terrorist attacks were the biggest losses in the political violence and terrorism insurance space, but in certain regions this has now been overtaken by major losses from SRCC events,” Allianz said.
Trends to watch
Almost half the world’s populations will go to the polls before the year is out, in a ‘super-cycle’ of elections in 2024, the report emphasised.
Security is a concern in many territories, Allianz noted, not only from the threat of localised unrest but because of the wider-reaching consequences of electoral outcomes on foreign policy, trade relations, and supply chains.
“The headline election will be in the US in November, when a narrow result could inflame existing tensions, particularly in the battleground states that could dictate the election’s outcome,” Allianz said.
European Parliament elections in June could see radical right parties gaining votes and seats, the insurer’s report warned.
This shift builds on electoral trends seen in Europe in 2023 and risks intensifying cultural and ideological divisions, Allianz observed.
Other potentially inflammatory elections include those in India in April and May, South Africa, also in May, and Mexico in June, the insurer highlighted.
“Widespread disaffection among voters could be exploited by misinformation created by artificial intelligence and spread via social media. Deepfakes, disinformation and repurposed imagery, as well as customised messaging, could galvanize unrest or influence small but potentially decisive parts of electorates,” Allianz said.
Public protests have skyrocketed in recent years, Allianz warned. Incidents of civil unrest doubled in the decade 2010-2020, and economic and insured losses from just seven civil unrest incidents in recent years cost approximately $13bn, Allianz said.
“Recently, farmers have mobilised across Europe, attracting support from populist politicians, and prompting policy concessions from European leaders, amid fears of a ‘greenlash’ against net-zero transition plans,” said Allianz.
In India, too, farmers have taken to the streets, reviving a movement from 2020-21, when dozens of protestors died.
“Climate change is likely to remain a key issue, with 2024 forecast to be possibly hotter than the record-breaking 2023 – a trigger that could result in more and increasingly extreme environmental protests,” the insurer said.
Activists are already intensifying their activities with a trend towards more targeted tactics and sabotage, Allianz suggested.
“Between 2022 and 2023, environmental activism incidents increased by around 120%. Businesses seeking to diversify supply chains by ‘friend[1]shoring’ or ‘near-shoring’ to mitigate geopolitical risks could find themselves facing hidden exposures in alternative markets. Civil unrest is the main threat but government instability and exposure to conflict are also concerns,” said Allianz.
“In Latin America, businesses could be indirectly impacted by the destabilising effects of organised crime on government resources and democracies in the region. The number of terrorist incidents around the world in recent years has fallen, but the number of deaths has increased, with violent conflict the primary driver of activity,” the report said.
“The attack on Moscow’s Crocus City Hall in March 2024 showed the catastrophic effects on life and property damage these perils can still wreak. Terrorism risk is likely to increase in Western Europe and the USA, largely driven by the Israel-Hamas conflict leading to a radicalisation of certain parts of the population in these regions, as well as the exploitation of security vacuums in certain regions of Africa,” Allianz added.
Victims of locality
Some targets can be specific, Allianz noted, but businesses are often victims of their locality and their footprint.
Targets can include government buildings, transport infrastructure, retail premises, private enterprises, and distribution centres for critical goods, the report noted.
“Businesses need to protect their people and property with forward planning, such as ensuring safe and robust business continuity planning is in place in the event of an incident, increasing security and reducing or relocating inventory if they are highly likely to be affected by an event,” Allianz warned.
“Using scenario planning and tracking risks in areas key to their operations, particularly transport and manufacturing centers, can raise businesses’ awareness of where the risk of political violence or unrest might be intensifying.
”Review your insurance policies. Property policies may cover political violence claims in some cases but insurers also offer specialist coverage via the political violence market,” the insurer advised.
Click here to read the report in full.
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