Terrorism falls in global threat landscape

Terrorism falls in global threat landscape | Corporate Risk & Insurance

Terrorism falls in global threat landscape

Since 9/11, business leaders have been sensitive to the threat of terrorism. But while the threat remains, multinational corporations are shifting their focus to something that poses a bigger risk to their operations: political violence.

“If you compare the two, we can see that the risk is moving towards political violence ever since the Arab Spring,” says Christof Bentele, head of global crisis management at Allianz Global Corporate and Specialty (AGCS). “From an insurance perspective, it’s clear that more and more clients understand coverages for terrorism, but they actually want to upgrade to look at political violence triggers.”

These triggers include perils like strikes, riots, civil commotion, revolution, civil war, war, revolution, insurrection, rebellion and coups d’état. "The reason for [the interest],” he said, “differs based on where clients are located or where they send people.”

Yet, wherever you are around the world, the odds of your business operations being thwarted by acts of terror aren’t so high. “Political violence perils are much more prevalent than terrorism,” Bentele said.

On top of that, the changing nature of terrorism has affected its risk to businesses. “Until about five years ago, iconic buildings or brands – western brands – icons for wealth and bigotry, were targets for international and especially for Islamist terrorism,” Bentele said. “Hence, the risk was more property-related. That has definitely changed.”

Today, terrorism is aiming more at mass-casualty events than property damage. “It’s targeting people, to gain maximum media attention,” he said.

Africa

Political Violence

“In Africa, the situation is deteriorating – I wouldn’t say everywhere, but in many countries,” Bentele said. “One reason for the growing instability is the trend of local leadership trying to stay at the helm of their countries way beyond their constitutional maximum service time. If you look at the list of elections this year, you can almost predict where we will see political tensions. Simply put, if presidents want to stay in their job beyond their maximum service time, they will have to change the rules to be able to do so, and people usually don’t like that, which ultimately results in civil commotion, riots or worse.”

Terrorism

Related to that discontent, Bentele said, is the susceptibility of the public to extremist ideology. Terrorist groups like Boko Haram recruit future terrorists more easily from regions where there is instability and unrest. “That’s definitely happening in Africa, and many of our clients are really concerned, and they should be,” he said. “Terrorism and political violence is a growing threat in many territories of the African continent.”

For multinationals with operations in certain African countries, there are two categories of risk. “One risk is the factory, the office or the plant – but another one is the people, employees, workers, contractors and their families,” Bentele said. “Big corporations have a duty of care, so they have to look out for their people. If you send people into certain areas, you want to make sure they’re safe.”

South America

Terrorism:

 “South America currently is not a hotspot for terrorism – especially not Islamist terrorism – and it hasn’t been for a long time,” Bentele said. In Columbia, armed groups like the FARC – especially after the peace agreement – and the ELN pose a small terrorist risk, as do groups in Venezuela, but those concerns are overshadowed by political violence.

Political Violence:

“The real problem in South America is political violence – strikes, riots, civil commotion,” Bentele said.

He offered Brazil as a prime example. “There’s no real risk of terrorism, but there’s a high risk of civil commotion and riots. Again, it has to do with income disparity,” he said. “It has to do with the people of Brazil being very frustrated and unhappy with their leadership and all the corruption within their government and corporate elites.”

That carries big implications for corporate risk managers of multinationals with operations in Brazil. “You’ll want to make sure that as a big corporation with major assets in Brazil, for example, you actually have political violence coverage,” Bentele said. “You may have to buy large limits, because there is a history of civil commotion and riots in some sectors, such as the hydroelectric sector.”

Asia

Terrorism:

“Last year, we witnessed the insurgency of ISIS-ideology into Malaysia and Philippines,” says Bentele. “It’s definitely a trend that is consolidating now and one we have to watch out for.”

Political Violence:

In terms of political risk, recent developments have calmed earlier fears. “In Asia there is obviously the concern about the situation with North and South Korea, however experts are less worried about a further escalation of the conflict with North Korea – especially now that it seems that the situation is calming down a bit – rather than a growing worry about a potential conflict in the Chinese sea.”

Europe

Europe bucks the trends seen throughout the rest of the world. “There is no real political violence risk in Europe, other than in Eastern Ukraine, but there is definitely a terrorism risk,” says Bentele. “Terrorism is on the rise in continental Europe and the UK.”

He notes that the top countries at risk of terrorism are Germany, France, the UK, Belgium, and Spain. While the Catalan separatist movement has put Spain on the political violence radar, he doesn’t predict a violent outbreak occurring. “But,” he says, “if you have locations in Catalonia, you might want to take a look at your business continuity plan to make sure you’ve got all your ducks in a row.”

North America

Fears of terrorist threats are of serious concern in the US public lexicon, but Bentele finds the fear does not reflect reality. “The US is still at a low risk when you look at terrorism,” he says. “I think the US has a very robust system to identify potential attackers before an attack happens. There is an awful lot of money that has been spent on managing potential threats and I think the US is one of those few countries that manage this really well. What is a real concern is the growing threat of active assailants, which we can insure for.”

Despite what the headlines might lead you to believe, political violence is a non-factor in the US. Rather, US-based or domiciled companies should be looking at their risks abroad, according to Bentele. “Nowadays,” he says, “There is an opportunity to have a global terrorism and political violence program embedded in your property program if you want it to be. The last policy we put together at Allianz included 120 countries with local terrorism and political violence policies.”

 

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