2021 Risk Maps: A locked-down world but terrorism and political violence risk remains

Parts of the world have spent the last 18 months in lockdowns but terrorism and political violence risks remain. While many countries have seen a steep decrease in terrorism incidents, others have not been so fortunate. Most Western countries, including Australia, have seen a deepening of complex geopolitical risk, such as civil unrest.

2020 has concentrated attacks and in certain cases lockdowns and government actions have worsened already fragile geopolitical ecosystems like Iraq, Syria and Mali.

Europe in particular has seen an increase of roughly 113 per cent of jihadist incidents and plots (albeit from a low base the year before) and 42 per cent increase in attacks from far-left extremists.

Additional face of terrorism

The attacks from the far left have generally come in the form of arson attacks from anarchists in France, Germany and Greece (though there are some incidents in Italy, Switzerland and the Netherlands as well).  Importantly, about 50 per cent of these have seen businesses as the targets of the attack.  As many anarchists claim concerns around capitalism as their motivation, this is a worrying sign for many international businesses as those who may not have typically been exposed to jihadist attacks could find themselves exposed on an anarchist front.

There is an important distinction here in the attack pattern of these two groups. Jihadist attacks in Europe tending towards armed assailant attacks with bladed weapons.  With anarchists, arson is generally the chosen method of attack.  This means that there is a difference in the type of risk associated with these incidents.  While businesses would find that it is their people who are more exposed to jihadist attack, with an anarchist attack, the exposure is more to property damage.  This has important ramifications for a clients’ risk register and their insurance programs.

Some good news for risk prevalence

In this year’s Risk Maps we have seen 22 countries experience a risk improvement. While African nations featured prominently in this, there have been some Asian countries included in this number.  South Korea saw a drop in rating from High to Medium and Vietnam saw a return to “low” rating after a year at medium rating owing to some civil unrest. South Asia has also seen some improvement with Sri Lanka dropping from Medium to low and Pakistan dropping from Extreme to High.

Several African nations that have involvement with mining and exploration have also seen material improvements in risk. Countries like Cote D’Ivoire and Sierra Leone have had improvements, with Sierra Leone moving back to “low” risk and Cote D’Ivoire moving back to Medium.

While these countries experienced a risk improvement, 10 countries saw a deterioration in their risk rating.  Within the Asia Pacific region only one country was on this list and that was Myanmar.  Since the coup d’etat in February 2021, Myanmar saw more than 150 incidents recorded and arrests for plots with many of these occurring since early June.  One of the more high-profile changes to the risk rating was the movement of the US from a Medium rating to a High rating. This was largely reflected by the increased potential for violent civil commotions owing to the impact of the siege of the Capitol building in January 2021.

Western civil unrest on the rise – risk for Australia

While many Western countries saw a decrease in the number of terrorism incidents and plots during lockdowns, there has been an increase in protest and civil commotion activity. With misinformation and conspiracy theories permeating into many Western countries (such as Australia, NZ, US, Canada, UK, Germany, Spain and Italy), protests are likely to remain an issue for many countries throughout 2021.

One of the many challenges to Australian and global businesses is the sheer complexity of the threat landscape. Political violence risk is something that takes many forms, whether it’s sabotage, terrorism, riots, civil commotions or war. Even within a single peril such as terrorism there are many actors (right wing extremists, left wing extremists and jihadists) and therefore many differing impacts that can result from these actors’ activities.

Risk mitigation considerations for companies

Many property insurers have spent 2019 and 2020 writing riots, strikes and civil commotions out of their policies. As a result many multi-nationals and even some Australian and New Zealand companies are seeking cover in the Political Violence insurance market. For those with Australian and New Zealand domiciled risk, they are finding that these risks can be transferred at a reasonably sensible price.

Companies further need to use data and analytics to understand their exposure to these risks, review their crisis management plans,  examine their supply chain to ensure that there are contingencies for locations that may be impacted by political violence, or face economic uncertainties, and perform due diligence on all third party agreements and supply chains to ensure that any potentially controversial links can be addressed.

It is important that businesses understand that terrorism and political violence can bring many different challenges to the risk register, so taking a proactive approach to managing these risks is essential.