Political Unrest Grows

Aon downgrades many European countries as government cutbacks spur protests.

The global economic crisis and reverberations from the Arab Spring color the latest edition of Aon Risk Solutions’ Terrorism & Political Violence Map. The 2012 map shows 37 countries downgraded to reflect a growing level of risk, including three countries—Maldives, Senegal and Papua New Guinea—that underwent double downgrades. Meanwhile, six countries were upgraded to reflect reduced risks.

In 2011, the map, which Aon produces in collaboration with Risk Advisory Group, showed 19 downgrades and 11 upgrades.

Neil Henderson, head of terrorism for Aon Risk Solutions’ crisis management practice, pictured at right, says that while the focus of the map in the wake of 9/11 was mostly on terrorism, that has shifted over the last couple of years as more and more countries experience political unrest and riots.

Forty-three percent of the countries downgraded because of a higher threat level are in Europe, reflecting the political protests and riots occurring in response to government spending cuts, says David Claridge, managing director at Risk Advisory Group. France, Germany, Italy, Portugal, Spain and the U.K. jumped from low risk to medium risk.

Terrorism hasn’t disappeared, of course. Claridge notes that the map shows some level of terrorism threat in 46% of countries worldwide. While the global threat was to some extent diminished by the death of Osama bin Laden, “we continue to see regional groups inspired by the Al Qaeda ideology,” he says.

“Africa has shown the most dramatic shift in terrorism threat,” he adds. “Ratings of six African countries have been downgraded as a result, with Senegal receiving a double downgrade, going from low to high risk.”

Claridge says the Arab Spring continues to cause aftershocks. “We’ve seen authoritarian governments in Africa and in wider parts of Asia taking measures to protect themselves from any potential similar challenges that have been meted out in the Middle East,” he adds, citing the civil unrest in Syria and Libya.

With downgrades far outpacing upgrades this year, “businesses need to identify the threats they face and implement comprehensive risk management programs,” Henderson says.

As public protests increase, he says, “where international companies have exposures in areas or countries that have political violence, they sometimes look at buying sublimits within their terrorism program, so they have at least some level of cover for those broader perils.”

Henderson adds that the level of unrest and the losses that it is causing are likely to affect insurance price. “Underwriters have become much more sophisticated in terms of how they monitor current activity and incidents globally,” he says. “As the situation changes, they will change their pricing accordingly.”

 

 

Bloomberg News

 

 

Page 1 of 2

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments

Advertisement. Closing in 15 seconds.