Aon Risk Map 2019: populism and terrorism create new business threats
Evolving terrorist ideologies and attacks combined with the rise of populism in Europe present new risks for businesses worldwide, according to the Aon 2019 Risk Map.
Security threats to employees and property, and supply chain and investment disruption have been amplified as political shifts challenge Europe’s existing order.
Populist parties are in government in 11 European countries, the report said, including Italy and Hungary, while support for populism is growing in many other countries including Spain, Sweden and Germany. The report found that populist parties hold an average of 22 percent of vote share across 33 European countries.
Isis fighters returning from the Middle East to this febrile political environment, as well as other ideologically driven terrorists, will see it as an opportunity, the report suggested. It found that terrorists “increasingly target public spaces and concentrations of people”, while 16 percent of terrorist attacks in 2018 “targeted or directly impacted business”.
Germany has seen “a spike in far-right attacks and plots”, Aon said, highlighting 23 incidents between 2016-2018. While Islamic state attacks in Europe and North America fell by half between 2017 and 2018 this does not mean activity has declined globally. The report said the group has “redirected its efforts elsewhere”.
Populism further complicates the risks as policies in this vein “lead to greater barriers to trade”, increasing the prospect of “politically-motivated moves to frustrate established contracts”. It also means firms will need to review their international supply chains as tariffs and trade barriers rise. Anti-immigrant policies, often central to this flavour of politics, fuel further far-right terrorism and social tension.
The report highlighted further risks for European firms operating globally, particularly in regions such as sub-Saharan Africa and Latin America which are “exposed to government interventions that can impact firms’ ability to investment and trade internationally”.
Scott Bolton, director, crisis management at Aon, said: “Insurance coverage is available to protect business against both the threat and impact of terrorism, but also for more nuanced issues such as denial of access as part of a security operation, loss of attraction following a terrorist attack, or the impact from acts of violence where motives aren’t immediately apparent; extending cover to include ‘malicious’ loss triggers.”
Aon head of political risk and structured credit Sarah Taylor added: “Businesses operating in territories where political risk is elevated should be considering insurance that covers against government decisions that can lead to contract cancellation, when measures are introduced to create barriers to trade, and against government action that curtails business operations and/or investments.”
While Henry Wilkinson, head of intelligence and analysis at the Risk Advisory Group, which worked in partnership with Aon on the report, said: “Reactionary populism in the political mainstream in several countries has given extremist fringes a sense of opportunity upon which to mobilise violent protests and intimidation around divisive political themes. Far right terrorism remains a largely disorganised but growing threat. Businesses in Europe cannot be complacent about violent risks in traditionally stable markets. A comprehensive capability to monitor, assess and manage violent risks, is as essential as a violent risk transfer strategy.”
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