According to Aon Risk Solutions’ 2017 Political Risk map, this year populism and terrorism converge to compound global risks.
The Aon Political Risk Map captures changing risks for businesses and countries across emerging and frontier markets (non OECD countries). A 14 per cent worldwide increase in terrorist attacks in 2016 and populist nationalism are creating an increasingly volatile operating environment for international business.
Scott Bolton, Director, Crisis Management, Aon Risk Solutions commented: “The shifting dynamics around terrorism and political violence, reflected in the global events seen in 2016, are presenting an increasing challenge for companies.”
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.
Henry Wilkinson, Head of Intelligence & Analysis at Risk Advisory: “Global politics in 2017 is moving in a more violent and crisis-prone direction. Authoritarian nationalism is on the rise and with it the risks of interstate crises and conflict, coups and rebellion, as well as political risks.”
Sarah Taylor, Executive Director, Head of Structured Credit and Political Risks, Aon Risk Solutions said: “The changing global landscape, driven by trade protectionism, populist policies and sanctions, is likely to have a significant impact on emerging and frontier markets. This makes it more important than ever for global businesses to understand and mitigate their exposures to political risk.”
Other violent risks are also evolving at the geopolitical level, leading to increased defence 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.
According to the findings in the report, 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. The report also states that 2016 saw a the number of terrorist attacks worldwide, 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.
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, which suggests a modest improvement in economic resilience after many years of deterioration.