Insurer Says Businesses Should Prepare for Growing Civil Unrest Risk

While large-scale terrorism events have declined in recent years, significant increases in riots, demonstrations, and vandalism have made civil unrest the main political risk exposure for companies, according to Allianz Global Corporate & Specialty (AGCS).

Recent occurrences of civil unrest have resulted in significant losses and insurance claims, AGCS said, and the impact of political violence can cause business disruption beyond physical property damage.

AGCS noted that political risks and violence returned to the top 10 risks in the Allianz Risk Barometer 2021, which is the first time survey respondents ranked the peril among the top 10 since 2018. Research suggests global protests will increase over the next 2 years, an AGCS statement said, noting that political violence also caused significant insurance claims in 2020.

Businesses don't have to be direct victims of civil unrest to suffer financial losses, the insurer said. Businesses can suffer revenue losses when areas are cordoned off for extended periods or while infrastructure damage is repaired to allow the reentry of customers, vendors, and suppliers.

The COVID-19 pandemic will likely fuel further instances of civil unrest as it magnifies underlying long-standing grievances, AGCS said. The pandemic has negatively affected political stability, increasing polarization and highlighting issues surrounding equality, labor conditions, and civil rights.

In response, businesses—especially in potentially exposed sectors like retail—need to prepare for civil unrest and political violence by reviewing business continuity plans, AGCS said. While such plans often focus only on natural catastrophes, it's become necessary to consider possible political disturbances and other types of disruptions like cyber incidents.

Organizations should have defined and tested procedures focusing on staff and clients that include general communication and social media plans, AGCS said. Businesses should also review their insurance policies, the insurer said.