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Global risksPopulism, terrorism converge to compound global risks

Published 24 April 2017

Aon publishes 2017 Risk Maps for Political Risk, Terrorism and Political Violence shows there has been a 14 percent increase in the number of terrorist attacks worldwide in 2016, up to 4,151 from 3,633 in 2015. Western countries saw a 174 percent increase in terrorist attacks in 2016, up from 35 attacks in 2015 to 96 attacks in 2016. Oil and gas companies were the target of 41 percent of terrorist attacks on commercial interests in 2016 and the trend has continued in 2017. But 2017 marks the first year in the last four where as many countries experienced a decline in political risk for investors as those experiencing an increase. This suggests a modest improvement in economic resilience after many years of deterioration. The potential for divergence between the United States and Europe around sanctions regimes could create uncertainty for investors in Iran, Russia, and even Cuba.

A 14 percent worldwide increase in terrorist attacks in 2016 and populist nationalism are creating an increasingly volatile operating environment for international business. Aon’s 2017 Risk Maps, covering Political Risk and Terrorism and Political Violence and produced in conjunction with Roubini Global Economics and The Risk Advisory Group, also confirmed that while Western countries saw a marked increase in terrorist incidents, attacks on these countries still account for less than three percent of terrorist violence globally. In 2016, the United States sustained the highest number of terrorist incidents in a decade, although, according to the Report, the threat is likely to remain moderate in 2017.

Terrorism and political violence
The terrorist threat continues to evolve, affecting an ever-wider set of sectors in more countries with more diversified tactics and intent to kill. Impacts range from loss of life to business interruption and disruption in the supply chain. Other violent risks are also evolving at the geopolitical level, leading to increased defense spending, more authoritarian forms of government and a weakening consensus between states. There are few indications of an overall improvement in violent risks in 2017. These developments have underlined the importance of considering crisis management perils that go beyond property damage, particularly in sectors that have been most affected such as oil and gas, transport and retail.

Scott Bolton, Director, Crisis Management, Aon Risk Solutions commented, said: “The shifting dynamics around terrorism and political violence, reflected in the global events seen in 2016, are presenting an increasing challenge for companies. Those with both domestic and international footprints have the potential to experience events that could impact their people, operations and assets. If we can understand what might reasonably impact an organization and its people, then we are better able to apply ‘best fit’, consistent approaches to manage risk.”

Henry Wilkinson, Head of Intelligence & Analysis at Risk Advisory, said: “Global politics in 2017 is moving in a more violent and crisis-prone direction. The balance of violent risks is starting to tilt from non-state actors back to states. Islamic State- and Al-Qaeda-linked terrorism remains a critical threat, threatening dozens of countries and key sectors, including oil and gas, aviation, tourism, retail and media. But in 2017, businesses must develop strategies to face more business-threatening risks from the geopolitical realm. Authoritarian nationalism is on the rise and with it the risks of interstate crises and conflict, coups and rebellion, as well as political risks.”