Soaring civil unrest the top political risk facing companies, says AGCS

Companies must review their business continuity plans to cope with “soaring” civil unrest that is likely to be exacerbated by the Covid-19 pandemic, according to Allianz Global Corporate & Specialty (AGCS). In the latest issue of its Global Risk Dialogue publication, the insurer says a significant rise in riots, demonstrations and vandalism, as terrorism declines, mean civil unrest is now the biggest political risk for companies. “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,” says Bjoern Reusswig, head of global political violence and hostile environment solutions at AGCS. “Civil unrest has soared, driven by protests on issues ranging from economic hardship to police brutality, which have affected citizens around the world. 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,” he adds. AGCS points out that political risks and violence returned to the top ten threats facing companies in its Allianz Risk Barometer 2021. It also flags recent research by Verisk Maplecroft that finds 75 countries across the world are set to experience an increase in protests by late next year. Of these, more than 30 countries, largely in Europe and the Americas, will likely see significant activity, according to the research. And businesses do not have to be direct victims of civil unrest, which can cause business disruption beyond physical property damage, to suffer financial loss, AGCS notes. It adds that Covid-19 is a key driver of the rise in civil unrest and is set to fuel further violence. “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,” he adds. Mr Reusswig says conspiracy theories that have “flourished” among sections of the population during the pandemic have prepared the ground for future turbulence, and physical damage in some cases. For example, a theory linking 5G technology with the coronavirus pandemic resulted in a series of arson attacks on mobile phone towers in Europe. AGCS says the steep rise in civil unrest means companies must review their business continuity planning and reassess insurance coverage. It says planning to mitigate political violence risks is key, particularly for exposed sectors such as retail. AGCS adds that business continuity plans typically only focus on national catastrophes, but there is a “growing need” for them “to address political disturbances and other types of disruption like cyber incidents”. “Having defined and tested procedures in place is crucial – these should focus on staff, clients and include general communication and social media plans,” says the insurer. Its Global Risk Dialogue also explains that political violence caused “significant” insurance claims last year and suggests companies should take a look at their insurance policies. AGCS has seen already and uptick in demand for specialist political violence covers. “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,” says Mr Reusswig.

Soaring civil unrest the top political risk facing companies, says AGCS

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