Western and emerging market political violence and terrorism risk gap widens

At a glance, the world would appear to be getting less risky in terms of political violence and terrorism, according to Aon's 2014 Terrorism and Political Violence Map. Some 34 countries saw reduced country risk scores while only four countries saw increased risk-Brazil, Japan, Mozambique and Bangladesh. Aon identified 80 countries with terrorism perils in 2014, 12% fewer than 2013. However, in reality the picture is more nuanced and is, on balance, not positive, according to Henry Wilkinson, Head of the Intelligence and Analysis practice at Aon Risk Advisory. The US, Europe, parts of the Middle East and west Africa saw improvements in political violence risks, but many emerging market economies continued to be affected by civil commotion and terrorism, he said. "The map shows a widening of political violence and terrorism risk between the western world and emerging markets. Western countries are pulling away while many emerging markets are locked into a high risk situation, while some have seen the risks of civil commotion and terrorism increase in 2013," he said.hideHigh levels of political risk in markets like Syria and Iraq will come as no surprise, but there are relatively high levels of political risk in leading high growth markets, like those in the Bric or Mint group of countries, said Aon. Brazil saw its risk rating increase from medium to severe due to widespread and large-scale violent anti-government protests throughout 2013. It was the only Latin American country to see its rating increase last year. Aon said that this unrest will likely continue in 2014, particularly ahead of the Fifa World Cup and October general elections. The risk rating of Japan has also increased, reflecting increased military spending and geopolitical tensions in the region. China and Japan are in a territorial dispute over a group of uninhabited islands in the South China Sea known as the Senkaku Islands in Japan and the Diaoyu islands in China. Shifting geopolitical power is an important trend driving political risk, according to Mr Wilkinson. The withdrawal of US interventionist foreign policy has led to a lack of international leadership that might otherwise have contained regional disputes. Regional powers are also now exerting more influence to fill this gap, he said. The ongoing effects of the economic crisis, Arab Spring and sustained conflicts in countries like Syria are other key drivers of political violence and terrorism in 2014, he added. Africa and the Middle East both saw some improvements in their political violence and terrorism ratings. There were eight decreases and just one increase in the ratings of Sub Saharan African countries. The risk of military coup and rebellion was removed from a number of countries in west Africa, reflecting increased stability that comes with economic growth. However, despite improvements, Africa remains a continent of high political violence and terrorism risk, with 22 countries having high to severe risk ratings, according to Aon. North Africa and the Middle East are still plagued by terrorism. The Middle East is the region most afflicted by terrorism globally with a 28% share of all terrorist attacks in 2013. Yet the Middle East has seen improvements as some Gulf States and Iran have witnessed a reduction in the risk of political violence in 2013, Aon said. Asia Pacific remains broadly stable, according to Aon, with only four changes out of 29 countries and territories. South Korea, Malaysia and Samoa all attained reduced risk ratings. Foreign businesses remain targets of political violence and terrorism, with the retail and transportation sectors being most affected in 2013, according to Aon's map. Some 33% of terrorist attacks targeted the retail sector, such as the September attack on the Westgate shopping centre in Nairobi, Kenya. 18% of terrorist attacks hit the transportation sector. "The map shows that having the means to understand and stay ahead of terrorism threats and political violence risks has never been more important," said Mr Wilkinson. "Despite signs of global economic recovery, businesses in emerging markets are as exposed as ever to a diversifying array of risks and threats from sophisticated and often highly networked adversaries. New threats can emerge increasingly rapidly, as hostile actors evolve faster and emulate tactics that have an ever greater impact, be it through mobilising mass unrest or mounting sustained armed terrorist attacks," he said. The map can be accessed for free at http://www.aon.com/terrorismmap.

Western and emerging market political violence and terrorism risk gap widens

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