World politics weak in face of global risks, warns Dragonfly in political risk outlook

Current global political trends do not bode well for reducing the risk of conflict and instability in 2022, according to a new report from Dragonfly, formerly the intelligence and analysis practice of the Risk Advisory Group. In its strategic outlook on political risk for next year, Dragonfly says geopolitical tensions are likely to heat up as much as the climate. “The state of world politics could scarcely be less conducive to meet global threats,” the firm’s report says. Henry Wilkinson, chief intelligence officer at Dragonfly, said the political landscape “remains extremely challenging for global businesses, and the state of world politics is highly unfavourable to meet wide-ranging threats and global risks”. Changes in international systems have laid the groundwork for an unsettled political climate in 2022. “The rules-based international order continues to weaken in the face of waning US commitment to uphold it, disunity between democracies and an intensifying spread of authoritarianism,” Wilkinson said. Global risks are many and wide-ranging. These range from the impact of the Covid-19 Omicron variant and environmental crises, to competition between the US and China, rising tensions over Ukraine and Taiwan, conflicts in Africa, widening inequalities and environmental crises, the report warns. “All of these are liable to prompt wider impacts on security and stability, sustain disruption to global supply chains and inflation, and threaten recovery and growth,” Dragonfly says. Covid-19 will remain the main operational challenge for businesses in 2022, the company adds. The virus is proving highly adaptive and disruptive, with distribution of vaccines proving divisive, it says. Dragonfly notes that further variants will likely emerge in 2022 but countries with higher vaccination rates will start to edge towards normality, with businesses and society able to operate without too many restrictions. “But we do not envisage a return to pre-Covid-19 business conditions anytime soon,” Dragonfly says. The report says a global economic rebound is a chink of light in the outlook for 2022, with many countries emerging “in bruised but reasonable shape”. However, it says that while this is a positive change, “it is still not a climate where a sense of normalcy is likely to prevail”. Europe will begin 2022 in a “weakened state”, Dragonfly says. It adds that Europe will be vulnerable to a rising tide of xenophobia, racism and extreme right-wing terrorism, in particular in Germany, the UK, Italy, the Netherlands and Sweden. The region’s economic recovery is also fragile. “New Covid-19 outbreaks and ongoing disruption to global supply chains, and particularly energy supplies, are the main factors that could derail or slow growth and compound a raft of other issues that threaten discord,” Dragonfly says. The climate crisis will be another political risk driver in 2022, after COP26 commitments showed global politics to be ineffective in tackling global risks, its report continues. Dragonfly says businesses will feel the pressure to take action on climate change, with climate activism expected to increase again in 2022, not least because of the impact of extreme weather on global supply chains and political stability. “With governments unwilling or unable to take the necessary measures with sufficient haste, businesses are ever more likely to be targets of pressure to adopt climate-friendly practices and in turn apply pressure on other businesses to follow suit,” Dragonfly says. It notes that businesses recorded the highest number of investor resolutions in AGMs linked to climate change this year, and says activist investors are likely to step up further in 2022.

World politics weak in face of global risks, warns Dragonfly in political risk outlook

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Related Articles