The Allianz Global & Speciality (AGCS), in its 2021 Risk Barometer has said significant increase in the number of riots, demonstrations and vandalism have made civil unrest the main political risk exposure for companies.
AGCS, said this has resulted in significant losses and increase in insurance claims.
The report noted that the impact of political violence could cause business disruption beyond physical property damages.
This being the case, the AGCS said it sees increasing public interest in specialist political violence cover to mitigate risks.
Citing country-by-country instances of civil unrest with attendant damages to businesses, the AGCS in the report stated that the violence that trailed the #EndSARS demonstrations in Nigeria, student protests in South Africa or clashes in Ethiopia with their damages, disturbances and ultimately, losses from riots, protests, vandalism or other forms of civil unrest were among the main political risk exposure for companies.
It further said with ongoing impact of the Covid-19 pandemic likely to drive further activity, business continuity planning needed to proactively address political violence risks, particularly in highly-exposed sectors such as retail.
The report, however noted that fortunately, large scale terrorism events have declined drastically in the last five years. But it observed that the number, scale and duration of riots and protests in the last two years was staggering and has seen businesses suffering significant losses.
According to Head of Global Political Violence and Hostile Environment Solutions of AGCS, Bjoern Reusswig, civil unrest has soared, driven by protests on issues ranging from economic hardship to police brutality which have affected citizens around the world.
Furthermore, he said the impact of the Covid-19 pandemic was making things worse, saying with little sign of an end to the economic downturn in sight, the number of protests was likely to continue climbing.
He viewed civil unrest as a current key business risk, adding that it causes physical damage, business interruption or loss of revenues, and maintained that civil unrest incidents are becoming a more significant risk for companies in the world business environment.
According to Reusswig, in the AGCS annual global risk survey, ‘political risks and violence’ has returned to the top 10 risks for the first time since 2018.
He noted that this risk trend was supported by recent research findings which predicted the ranks of global protesters to swell over the next two years.
The AGCS report quoted a research firm, specialising in global risk analytics, Verisk Maplecroft, as saying that it expects 75 countries to experience an increase in protests by late 2022, adding that of these, more than 30 – largely in Europe and the Americas – will likely see significant activity.
“Political violence also caused significant insurance claims in 2020. While the protests, following the death of George Floyd at the hands of the Minneapolis police, which occurred in 140 US cities over the spring, were mostly peaceful, the arson, vandalism and looting that did occur will cost the insurance industry at least $1 billion to $2 billion in claims,” the report added.
The report noted that the Covid-19 pandemic was a key driver behind the rise of civil unrest, adding that it has both magnified underlying long-standing grievances and given them a focal point.
“The pandemic has negatively affected political stability, increasing polarisation and bringing into sharp relief issues surrounding equality, worsening labor conditions and civil rights,” it added.
The report further quoted a risk consultant for North America, Michael Stone, as saying that unfortunately, the risk of riots and violence was likely to become more acute because of Covid-19.
It noted that the measures governments had used to combat the coronavirus have had a significant socioeconomic impact and frustration is growing in large population segments.
It said the impact was 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,” it added.