Aon’s (NYSE:AON) 2018 Risk Maps covering Political Risk and
Terrorism and Political Violence, produced in conjunction with
Continuum Economics and The Risk Advisory Group are published
today.
Terrorism and Political
ViolencePolitical violence risks are rising globally, due
to geopolitical tensions, a weakening of liberal democratic
governance, and the repercussive effects of chronic conflicts
around the globe.
For the third successive year, more country risk
ratings have increased (17) than decreased (6). This year:
- 40% of countries are listed as
being exposed to terrorism and sabotage risk;
- 60% to civil unrest risk, and;
- 33% to insurrection, war or coup
risk.
Forty-six countries or territories are now rated
as high or severe risk, representing 22% of the global total.
The likelihood of interstate
conflict, even involving major powers, is at the highest
point since the end of the Cold War. Growing geopolitical
competition and weak leadership in international diplomacy have
contributed to sustained or increased risks of armed conflict over
the last year. Growing rates of polarisation over political,
economic and social issues in mature democracies, and divisions
between Western powers in the face of complex threats and risks,
has also contributed to worsening global security and greater
strategic uncertainty.
The number of terrorist attacks
in Western countries in 2017 (204) was roughly double that of 2016
(96) but the total number of casualties in both years was broadly
the same (1,092 in 2017), meaning that the lethality of attacks has
fallen.
Notably, the threat posed by Islamic
State has stopped spreading – but has not yet receded. IS
mounted terrorist attacks in 29 countries on five continents in
2017, the same number of countries as in 2016 and up from 19
countries in 2015, but the global reach of IS appears to have
peaked, and it seems likely that the number of countries where it
is able to mount attacks, or inspire others to do so, will fall in
2018.
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.
Political Risk Last year
political risk increased in eleven countries,
compared to only two countries that saw reduced risk, showing the
persistence of political risk across the globe, highlighted by
increases in political violence and supply chain disruption. Many
countries’ risks of supply chain disruption have risen due to both
climate shocks and weakening fiscal positions.
Notably, over the last year, Asian
countries’ trade linkages have been shifting away from the
US and toward China. This is due to
China’s economic development, and its rise as a trade giant. Amid
China’s rise, Asia’s exports to the US have edged down from around
23% of total exports in 2000 to stabilize at around 12% in recent
years. By the same token, Asia’s exports to China have more than
doubled over the past decade to around 23% currently.
Elsewhere, political risks in Latin
America are increasing ahead of a busy election season,
delaying major reforms in Brazil and stoking fears of reform
reversal in Mexico. Major countries are at risk of electing
populist governments, and smaller countries are experiencing their
share of political noise.
More broadly, the region experiencing
most downgrades is Africa. Ongoing conflicts within
countries, the erosion of democratic governance and increasingly
frequent corruption scandals have led to more political violence.
Groups such as IS and Boko Haram are taking advantage of fragile
institutions and weak borders. Elsewhere, the Middle East contains
some of the highest-risk countries in the world: Iraq, Syria, Yemen
and Egypt. Instability and violence in the region have spilled over
to neighbouring countries, undermining trade and tourism.
Mark Parker, Head of Property, Casualty
and Crisis Management, Aon Global Broking Centre, said:
“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.”
Paulina Argudin, Director, Country Risk
Model, Continuum Economics, said: “The Aon Political Risk
Map 2018 captures changing elements of political risks for
businesses across emerging and frontier markets countries. Last
year we saw political risk rising in several countries, driven
mainly by increases in political violence and supply chain
disruption. The persistence and rise of political risk across the
globe demonstrates how relevant it is for businesses to identify
and monitor specific political risk elements in their countries of
operation.
Henry Wilkinson, Head of Intelligence
& Analysis at The Risk Advisory Group, said: “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. 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.”
About AonAon plc (NYSE:AON)
is a leading global professional services firm providing a broad
range of risk, retirement and health solutions. Our 50,000
colleagues in 120 countries empower results for clients by using
proprietary data and analytics to deliver insights that reduce
volatility and improve performance.
About ContinuumContinuum Economics (formerly
Roubini Global Economics) is the international market-leading
service for independent economic research powered by 4Cast and
Roubini Global Economics. With its growing user base of 10,000
clients and a reputation for incisive analysis on every aspect of
the market, it provides research that spans short-term market
signals and long-term strategic themes. This approach uncovers
opportunities and risks before they come to the attention of
markets, helping our clients make more informed decisions.
Continuum Economics works with clients in a series of different
ways, from macro strategy subscription products to bespoke work,
multi-client conference calls, direct access to analysts and the
licensing of its systematic country risk analysis tool. For further
information on Continuum Economics, please visit
www.continuumeconomics.com
About The Risk Advisory GroupThe Aon Terrorism
and Political Violence map represents detailed empirical and
intelligence based assessments on terrorism threats and political
violence risks.
The map has been produced in conjunction with
The Risk Advisory Group since 2007. The Risk Advisory Group is a
leading, independent global risk management consultancy that helps
businesses grow whilst protecting their people, their assets and
their brands. By providing facts, intelligence and analysis, The
Risk Advisory Group helps its clients negotiate complex and
uncertain environments to choose the right opportunities, in the
right markets, with the right partners. www.riskadvisory.com
Notes to editorsThe Aon Political Risk Map
captures changing risks for businesses and countries across
emerging and frontier markets (non OECD countries).
For more information and to access the
interactive maps and full report please visit the Aon
website.
Media ContactsFor further information please
contact Alexandre Daudelin (514.982.4910)
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