Wildfire unrest, terrorism and war risk in emerging markets: 25% countries rated High or Severe Risk
- Widening gap in political violence and terrorism risk between Western countries and emerging markets
- Instability entrenched in MENA region with sharp rises in terrorism
- Social media-enabled wildfire unrest a major risk factor for business
- Brazil country risk rating raised due to unrest, in the year of the World Cup
- Geopolitical rebalancing in Asia pushes up Japan country risk rating
- Iran attains a reduced risk score from Severe to Medium
LONDON (29, January, 2014) - The Risk Advisory Group plc, a leading global risk management consultancy specialising in security, political risk and business intelligence services, has collaborated with Aon Risk Solutions, the global risk management business of Aon plc, to produce the 2014 Aon Terrorism & Political Violence Map, released this week.
The 2014 Map comes in a print edition and as an online dashboard, providing companies with global and country level perspective on terrorism and political violence ratings The findings of the map this year point to a widening gap in political violence and terrorism risk between developed economies in the West and emerging markets. There are 49 countries rated High or Severe risk this year, representing around a quarter of the countries surveyed. Overall, 34 countries attained reduced country risk scores and only four – Brazil, Japan, Mozambique and Bangladesh – received increased country risk scores in 2014. Most (68%) of the improved ratings were for countries assessed in 2013 as moderate risk or lower. Conversely, 79% of all countries with High or Severe risk ratings remained unchanged, indicating that countries that have experienced the worst effects of the Arab Spring, economic crises and upheaval are struggling to restore or improve political stability and security.
Among the key systemic risk factors Risk Advisory analysts identified as shaping terrorism and political violence risks this year are uneven rates of recovery from the global economic crisis and the Arab Spring, persisting fiscal imbalances, non-state armed groups exploiting weakened states, and shifting geopolitical balances of power. Civil commotion, protests and strikes remain by far the most prevalent risks worldwide. Social media-enabled wildfire unrest in particular is a major new challenge for governments and businesses alike, and contributed directly to high risk ratings for Turkey, Brazil and Ukraine.
Positive findings of the map suggest North America, and Western and Northern Europe are moving beyond the worst political violence repercussions of the global economic crisis. Eleven European countries had civil commotion perils removed, and nine attained reduced country risks scores. Canada also attained a reduced country risk rating. Kuwait, Qatar and UAE attained reduced risk ratings, marking a sharp divergence between improving stability in GCC countries and deepening insecurity in the Levant and Iraq.
Globally, the balance of the Map findings indicates a positive net trend of declining terrorism with 12% fewer countries receiving terrorism threat perils than in 2013. In most cases, this reflects a reduced incidence of attacks and plots in Western countries. However, countries with High to Severe risk ratings in many cases saw significantly increased levels of terrorist and insurrection activity. This in part reflects a shifting focus of the global jihadist movement, from mounting attacks in the West to exploiting the ongoing instability and insecurity wrought by the Arab Spring. They also are symptomatic of a weakening monopoly of armed force and political power from central government to more peripheral interest groups.
This increasing terrorism trend in High and Severe rated countries is most acute in the Middle East and North Africa, which together accounted for 52% of all attacks and plots worldwide in 2013, according to the Risk Advisory and Aon Terrorism Tracker database. The North Africa region as a whole saw a remarkable 54% increase in attacks in 2013 compared with 2012, mainly in Egypt, Libya and Tunisia. Lebanon and Iraq – two countries that did not experience civil uprisings – have also seen sharp rises in terrorist violence, militia activity and sectarianism, in part due to the spreading effects of the Syrian civil war.
South Asia remains a region of high risk, with a negative outlook ahead of the ISAF drawdown from Afghanistan. The region accounted for 24% of all terrorist attacks Risk Advisory recorded globally in 2013, making it the second most terrorist-afflicted region behind the Middle East. The overall findings for Sub-Saharan Africa are positive in net terms, with eight country scores reduced and just one increase to the 37 country scores that cover Sub-Saharan Africa in 2014. The main improvements came in West Africa. However, 46% of countries in the region still have High or Severe risk levels.
In East Africa, terrorism stands out as the predominant threat. The inability of the government of Somalia to establish its influence in the country contributes to the continued high terrorism threat across much of East Africa. Asia Pacific and Oceania remained broadly stable with no Severe risk ratings. However, a changing regional order in Southeast and East Asia contributed to increased, albeit still low, war risk ratings.
The country risk score for Japan increased from Negligible to Low and a war peril was added to Vietnam, due to geopolitical tensions and increased military spending the region. The country risk ratings for Latin America were largely static, with 88.5% of countries remaining unchanged. Reflecting economic challenges and rising expectations, civil unrest is a widespread risk across the Latin American region, with 63.8% of the countries displaying a strikes and riot peril. Brazil was the only Latin American country to attain an increased risk rating from Medium to High, due to widespread and large-scale violent anti-government protests in 2013, raising questions about security during the FIFA World Cup this year. Methodology and resources The map assesses political violence risk and terrorism threat in the 203 countries and territories. Color-coded ratings on a five-point scale act as a gauge for the overall level of risk to business in each country. Three peril icons indicate the three different classifications of political violence risk encountered by businesses:
- Terrorism and sabotage
- Strikes, riots, civil commotion and malicious damage to property
- Insurrection, revolution, rebellion, mutiny, coup d’état, war and civil war
Henry Wilkinson, Director of the Intelligence and Analysis practice at Risk Advisory, said, ‘The map shows that dedicating adequate resources to monitoring and assessing political violence, stability and insecurity has never been more important. Our data shows businesses in emerging markets are as exposed as ever to a diversifying array of risks and threats from sophisticated and often highly networked adversaries. New threats emerge and evolve rapidly, with an emulation of tactics that have ever greater impact, be it mobilising mass unrest or mounting sustained armed terrorist attacks.
Risk Advisory is committed to enabling the world’s leading businesses to succeed in emerging markets, and is pleased to work in partnership with Aon on the 2014 Terrorism & Political Violence Map.’ Neil Henderson, head of Aon Risk Solutions’ Crisis Management Terrorism team, said, ‘The map shows that while the terrorism threat in the West has declined, other regions are witnessing significant increases in terrorist violence and activity.
Having unrivalled access to regional data and fact-based insight enables our global clients to begin planning ahead of these trends by performing necessary risk identification and consider preventive risk management solutions. This insight allows our clients to plan overseas expansion or international growth and supports them in their efforts to be resilient to a terrorist or political violence threat.’ Ian Nunn QGM, head of Aon Risk Solutions’ Crisis Consulting team, added, ‘Clients are naturally keen to penetrate key economic markets around the world, and seek highly attractive opportunities where they can maximise greater returns from their investments. It is important for businesses to recognise that this will also pose significant new political, security and operational risks that will have to be combined with tough regulatory and legislative pressures.’
Risk Advisory and AonRisk Advisory has partnered with Aon since 2007 in the research analysis and production of the Aon Terrorism & Political Violence Map, and the Terrorism Tracker global incident database and monthly newsletter.
About Risk AdvisoryRisk Advisory helps clients navigate increasingly complex regulatory, compliance and security environments in some of the most challenging jurisdictions by providing intelligence, investigation and security services. Its clients include many of the world’s leading corporate entities, financial institutions and law firms. Risk Advisory’s specialist services include country and market entry studies and assessments, and its Security Intelligence & Analysis Service, a specialist intelligence service that it provides to many of the world corporate security and crisis management team.
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 65,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise.
Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsorship with Manchester United. Aon GRIP is the company’s Global Risk Insight Platform. Aon *WorldAware is an online country risk information service available to Aon clients as well as the public via mobile apps. The information is provided by Risk Advisory and reviewed on a daily basis to reflect the ever-changing political and security situations around the world.