Allianz Risk Barometer 2023 -
Rank 10: Political risks and violence

The invasion of Ukraine by Russia in February 2022 intensified a febrile risk landscape as economies around the world contended with the post-Covid recovery, inflation, and the rising cost of living.

Unrest and protests in the last year ignited over the rights of women and minorities in Iran, fuel prices in Kazakhstan, economic failures in Sri Lanka, abortion rights in the US, corruption in Argentina, and Covid restrictions in China. The end of the year saw multiple strikes across Europe over pay and working conditions, and even the foiling of a far-right plot to overthrow the German government.

While recent protests have disparate causes, they share common themes, says Srdjan Todorovic, Head of Political Violence and Hostile Environment Solutions at AGCS. These include resentment at governments perceived to ignore the people and their will, groups emboldened to stand up for their beliefs, empowered unions, and cost-of-living concerns, leading to desperation and opportunism: “In countries with wide financial discrepancies, ethnic issues are on the rise. So is a sense of grievance around specific events and longer-term systemic injustice. Environmental issues also come into play. Resentment can be further fueled if a government is seen to respond inadequately or with excessive force.”

War ranks as the top political risks and violence exposure in this year’s Allianz Risk Barometer (47% of responses). “As well as Ukraine, there is concern over potential conflict between other nations,” says Todorovic. The impact of war in Ukraine has been amplified because it affected the post-Covid recovery and damaged growth, with sanctions on Russia intensifying inflationary pressures.

“Strikes, riots and civil commotion (SRCC) have a combined score of 69% (see graphic), representing the real risk these present to businesses,” Todorovic continues. “The last few years have shown the huge impact a coordinated violent SRCC event can have on an economy and politics, such as the Black Lives Matter protests in the US and South Africa Zuma riots of 2021."

Industries at risk – particularly government departments, industry, and the retail, transport and mining sectors – should monitor local activity carefully and identify their supply chain vulnerabilities. They should then review their insurance policies and update business contingency plans as necessary.

Potential flashpoints in 2023 will include countries with polarized politics and those holding elections, says Todorovic. “As inflationary frustrations grow, I expect a number of SRCC incidents to occur on most continents, based on economic, ethnic and political grounds.”