• Friday, April 19, 2024
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Insurers see strike, riot, protest push up risks for businesses

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Businesses are increasingly witnessing the impact of protest movements and civil unrest on their operations, a trend that is forecast to grow

A new report by Allianz identifies five factors likely to power ongoing incidences of political violence activity around the world

Strikes, riots, and civil commotion racked up $12bn of losses for businesses and institutions from just six major incidents in recent years. Insurance claims from South African riots in July 2021 cost $1.9bn, while that of Nigeria from EndSARS had paid out N11 billion as at first quarter of 2022.

According to analysts from Allianz, businesses should view the current climate as a catalyst for evaluating best practices and policies around preparing office locations and employees for the impact of potential civil unrest.

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Anger over growing social inequality and the cost-of-living, foundering faith in governments and institutions and increasingly polarized politics, together with a rise in activism and environmental concerns, are the main factors expected to fuel ongoing incidences of strikes, riots and civil commotion (SRCC) around the world, according Allianz Global Corporate & Specialty (AGCS).

The heightened risk environment means businesses need to remain vigilant about the different threats such activity can pose. In addition to buildings or assets suffering costly material damage, operations can be severely disrupted, resulting in significant loss of income.

“Incidences of strikes, riots and civil commotion have not only increased in recent years, they are also becoming more intense and catastrophic. These types of events are making our era one of uncertainty,” says Srdjan Todorovic, head of Political Violence and Hostile Environment Solutions at AGCS.

“We have seen multibillion-dollar loss events in the US, Chile, and Colombia. The threat is changing, and although many of the reasons for it are universal – whether economic, political, or environmental – it can play out differently in different regions, with various levels of violence and disruption. Operational and security management within organizations should view the current climate as a catalyst for evaluating best practices and policies around preparing locations and employees for potential civil unrest and building resilience.”

Civil unrest risks rose in over 50 percent of countries between Q2 and Q3 2022 alone, according to the Verisk Maplecroft Civil Unrest Index – out of 198 countries, 101 saw an increase in risk. Since 2017, more than 400 significant anti-government protests have erupted worldwide.

It is unsurprising then that ‘political risks and violence’ ranks as a top 10 peril in the Allianz Risk Barometer in 2023. In Africa and the Middle East, political risks and violence fell two places to sixth but it is still in the top three risks in Burundi, Madagascar, and Nigeria. It remains fourth in South Africa and eighth in Cameroon.