STATISTICS:

Aon: likelihood of interstate conflict is at the highest point since the end of the Cold War

Global political volatility is leading to heightened levels of political violence and political risk, the Aon's 2018 Risk Maps for Political Risk, Terrorism and Political Violence, released on April 10, shows.

The main findings of the 2018 issue of the annual Aon study are:

  • Political Violence: 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 increased risks of armed conflict over the last year.
  • Terrorism: The number of terrorist attacks in Western countries in 2017 (204) doubled - up from 96 in 2016, though casualties remained at similar levels. A number of war zones internationally continue to serve as incubators for international terrorism, although the global threat from Islamic State seems to be waning somewhat.
  • Political Risk: Last year saw political risk increase in 11 countries, with climate change and commodity shocks weakening fiscal positions, which are still struggling to recover from the commodity shock, and exacerbating rising levels of political violence and supply chain disruption.
"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," Mark PARKER, Head of Property, Casualty and Crisis Management, Aon Global Broking Centre, said.

Terrorism and Political Violence

Political 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 polarization 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'sexports 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 neighboring countries, undermining trade and tourism.

Notes to editors
The 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.

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

Share |

Related articles

Increasing regions' resilience to flood and draught - on the ICAR 2018 agenda

In the context of the increasing frequency and intensity of meteorological events as a result of climate change, improving resilience to natural disaster risks is a primary objective, which requires the cooperation of all the interested entities - institutions of public administration, associations specialized in risk analysis and assessment, insurance companies, consultancy bodies, and non-profit organizations, etc.

2018-09-20

LIVE: 1st National Reinsurers Summit in Moscow: focus on global cooperation

Today has started in Moscow the 1st National Reinsurers Summit "National Reinsurers: Focus on global cooperation". Organized by the Russian National Reinsurance Company (RNRC) with the support of the Central Bank of the Russian Federation, the conference has the xprimm.com insurance portal as Media Partner.

2018-09-20

LIVE from Monte Carlo: The 62nd edition of the "Rendez-Vous de Septembre"

The 62nd edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers starts Sunday in Monte Carlo. XPRIMM Publications covering the CEE, SEE and CIS insurance markets are available at the XPRIMM stand in Fairmont Hotel, as well as at the most important venues in Monte Carlo.

2018-09-13

ICAR 2018 registrations opened; top professionals in the fields of re/insurance, claims adjusting, risks modelling on the speakers list

"Various macro trends keep manifesting themselves: the digital age, longevity, ecological breakdown and increased protectionism are some of the key topics. While these changes can threat an established business model, macro trends can also be used to widen a commercial playground and explore different fields of profit," says Angelika WERNER, Expert Atmospheric Perils, Property Underwriting EMEA, Swiss Re.

2018-09-13

ON THE MOVE

TOP EVENT

photodune-3834701-laughing-girl-xs

LIVE: 1st National Reinsurers Summit in Moscow: focus on global cooperation

Today has started in Moscow the 1st National Reinsurers Summit "National Reinsurers: Focus on global cooperation". Organized by the Russian National Reinsurance Company (RNRC) with the support of the Central Bank of the Russian Federation, the conference has the xprimm.com insurance portal as Media Partner.

20.09.2018

photodune-3834701-laughing-girl-xs

LIVE from Monte Carlo: The 62nd edition of the "Rendez-Vous de Septembre"

The 62nd edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers starts Sunday in Monte Carlo. XPRIMM Publications covering the CEE, SEE and CIS insurance markets are available at the XPRIMM stand in Fairmont Hotel, as well as at the most important venues in Monte Carlo.

13.09.2018

Willis Re - Market still soft, but functional

Despite the high losses from 2017 the reinsurance market is still soft, James KENT, Global Chief Executive Officer (CEO) of Willis Re stated at a press briefing in Monte Carlo.

10.09.2018

See all