11 April 2018Insurance

Political risk and violence, terrorist attacks on the rise

Global political volatility is leading to heightened levels of political violence and political risk, according to Aon’s 2018 Risk Maps for Political Risk, Terrorism and Political Violence.

The likelihood of interstate conflict, even involving major powers, is at the highest point since the end of the Cold War, according to the report. Growing geopolitical competition and weak leadership in international diplomacy have contributed to increased risks of armed conflict over the last year.

The number of terrorist attacks in Western countries in 2017 (204) doubled – up from 96 in 2016, though casualties remained at similar levels, the report notes. A number of war zones internationally continue to serve as incubators for international terrorism, although the global threat from Islamic State seems to be waning somewhat.

In particular, the tourism sector is having to manage the risks posed by increased terrorism, with the sector a highly attractive target for some terrorist organisations. In 2017, there were at least 35 attacks worldwide that directly targeted commercial sectors that are critical components of the tourism industry, such as hotels and resorts, nightclubs, civil aviation and visitor attractions.

In addition, 2017 saw political risk increase in 11 countries, with climate change and commodity shocks weakening fiscal positions, which are still struggling to recover from the commodity shock and exacerbating rising levels of political violence and supply chain disruption.

“The Aon Terrorism & Political Violence Map 2018 points to inter-state tensions driving up longer-term political violence risks, as well as diversifying terrorist and extremist threats particularly in the West,” said Henry Wilkinson, head of intelligence & analysis at The Risk Advisory Group, which contributed to the report. “The long-term trend of non-state actors being the predominant political violence concern in most regions is shifting towards geopolitical risks. These are more business threatening and demand board-level ownership. In such an unsettled environment, it is imperative that businesses invest in world class crisis and risk management programs that are intelligence-led, anticipatory and adaptive to rapid change.”

Mark Parker, head of property, casualty and crisis management at Aon Global Broking Centre, added: “The global geopolitical environment remains volatile. This is reflected in the 2018 Risk Maps, with the interlinked threats posed by Political Violence and Political Risks growing. Given this heightened level of risk, and the rapidly evolving landscape against which businesses are operating, it is essential the companies understand their exposures and the potential for political instability to impact their people, property and supply chains. Ensuring that the right solutions are in place to mitigate and transfer risk is essential for firms operating internationally.”

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More on this story

16 April 2018   The looming expiration of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) is a concern for insurers with significant terrorism exposures, AM Best warned.
10 July 2018   Broker Aon has collaborated with property/casualty insurer Chubb and Lloyd’s to develop a standalone terrorism and political violence solution that addresses the demands of an increasingly regulated environment.