Business
Insurance firm, Allianz, cautions businesses face risk of rise in social unrest
A global insurance firm, Allianz Global Corporate and Specialty (AGCS) has cautioned that businesses across the world face risk of rise in social unrest in several parts of the world. The firm warned that the destabilizing potential of disrupted supply chains and rising cost of living due to inflation could instigate civil unrest in many countries globally.
The corporate group observed that damages and losses from previous protests in France, Chile, the US, and South Africa cost billions of dollars.
The insurance giant also noted that the power of social media, in combination with political polarization, fuels protest movements.
The group, therefore, asserted that companies should review and update their business contingency plans if necessary, considering any supply chain vulnerabilities.
According to Allainz, “Businesses should prepare for a rise in civil unrest incidents as the cost-of-living crisis follows hard on the heels of the Covid pandemic.”
Allainz insisted that with confidence in traditional sources of information and leadership being undermined, the role of social media platforms in activating civil unrest is becoming increasingly influential.
The group warned that strikes, riots, and violent protest movements pose risks to companies because in addition to buildings or assets suffering costly material damage, business operations can also be severely disrupted with premises unable to be accessed, resulting in loss of income.
According to Srdjan Todorovic, Head of Crisis Management, UK, and Nordics, at AGCS, “Civil unrest increasingly represents a more critical exposure for many companies than terrorism.
Todorovic will become Head of Global Political Violence and Hostile Environment Solutions at AGCS on July 1.
He maintained: “Incidences of social unrest are unlikely to abate any time soon, given the aftershocks of Covid-19, the cost-of-living crisis, and the ideological shifts that continue to divide societies around the world.
“Businesses need to be alert to any suspicious indicators and designate clear pathways for de-escalation and response, which anticipate and avert the potential for personnel to be injured and/or damage to business and personal property.”
It will be recalled that the United Nations (UN) had cautioned disrupted supply chains and surging food, fuel and fertilizer prices, have destabilizing potentials, during the raging conflict between Russia and Ukraine, which the UN identified represents about 30% of the world’s wheat supply. UN Secretary-General Antonio Guterres had in March 2022, noted: “All of this is planting the seeds for political instability and unrest around the globe.”
Also, Verisk Maplecroft articulated that the rising cost of living could make a rise in civil unrest inevitable, in middle-income countries, which were able to offer social protection during the pandemic but will now find it difficult to maintain that level of spending as the cost-of-living surges.
Verisk Civil Unrest Index Projections indicated that 75 countries will likely encounter an increase in protests by late 2022, resulting in, for example, a higher frequency of unrest and more damage to infrastructure and buildings.
“The outlook is most bleak for the 34 countries that face significant deterioration by August 2022. More than a third of these states are in Europe and Central Europe (12), followed by the Americas (10), Africa (6), Middle East and North Africa (3) and Asia (3),” the Index highlighted.
It was observed that economic and insured losses from previous protests have been significant, creating significant claims for companies and their insurers.