The Covid-19 pandemic suppressed and aggravated terrorism and political violence risks in 2020, according to the Terrorism & Political Violence Risk Map 2021 by a geopolitical and security intelligence service, and an insurance company. They report that the unprecedented scale of state control, economic inequality and public anger over government handling of the pandemic will continue to play an influential part in growing global unrest.
Insurer Aon developed the 2021 Risk Maps with Continuum Economics and Dragonfly, which examine political risk, terrorism and political violence globally. Aon and Dragonfly (the new identity of the former Intelligence & Analysis practice of The Risk Advisory Group) have been producing the risk maps since 2007.
Terrorism & Political Violence
Lockdowns and travel restrictions have had a containing effect on most forms of terrorism and protest in 2020 – the percentage of countries exposed to terrorism and sabotage fell to 45pc – with surges in incidents mainly accompanying an easing of restrictions. As a result, terrorist attacks by extreme-right and extreme-left actors fell overall worldwide. But extremists and activists from across the spectrum are evolving their narratives; the pandemic has been an opportunity to build support and challenge established orders and forms of governance through protests and violent direct action.
A sharp rise in civil unrest and insurrection risks in the United States shows that democratic governance in a time of profound crisis is particularly vulnerable to challenges, according to the document.
Jihadist violence rose overall by 20pc in 2020. The majority of this activity was in conflict zones, such as Iraq, Syria, Afghanistan and Mali, all of which are reliant on external military and political commitments to ensure stabilisation. The impact of COVID-19 on these fragile states is a factor, but foreign troop withdrawals also played a role.
Political Risk
This year, political risks have risen. Seven countries experienced a deterioration in the political risk situation and none improving following a significant uptick in 2021 inflation in emerging markets (EM), a setback for the green recovery drive following COVID-19, and the risk of EM divergence from developed markets per capita incomes, as a result of lagging and insufficient vaccination implementation in EM.
Rebuilding better post-COVID-19, and especially rebuilding greener, has been presented as an opportunity by most international institutions, especially the EU. The economic case for a green recovery is based on job creation and ultimately cheaper energy costs.
Yet the fiscal burden of addressing the COVID-19 crisis has meant that by the end of 2020, less than half of the Paris Agreement’s signatories had delivered on its core provisions – to raise the ambition of their contributions towards achieving the goal of limiting the global average temperature increase to 1.5 degrees above pre-industrial levels.
Frontier market supply chains increasingly vulnerable: Supply chain disruption risk, exacerbated by climate change and extreme weather, is a growing issue for frontier markets where COVID-19 has resulted in much wider fiscal balances, higher inflation and larger debt burdens. As a result, these countries are at greater risk of falling behind in efforts towards climate change mitigation. However, rising commodity prices and inflation can help in reducing the debt burden of commodity-focused emerging markets
Comments
Vlad Bobko, head of Crisis Management, Global Broking Centre, Aon, said: “The COVID-19 pandemic has complicated an already fractured landscape of geopolitical risks, which firms operating globally need to navigate. From rising instances of civil unrest, through to economic dislocation and the long-term potential for inflation, in an increasingly connected and volatile world, informed decision-making has never been more important.
“Aon’s Crisis Management practice is supporting clients as they navigate these complex risks. Whether it is protecting against government intervention in emerging markets, sovereign and private counterparty defaults, or protecting people and operations from the threats posed by civil unrest, political violence and terrorism, our team is working to protect against – and mitigate – often significant and complex client exposures.”
Henry Wilkinson, Chief Intelligence Officer at Dragonfly, said: “The pandemic is a long-tail risk that has created an artificial near-term global risk picture, particularly of political violence risks. The extraordinary measures to contain the pandemic have been suppressive but politically aggravating. A tide of risk by 2022 is likely as mass vaccinations and an easing of restrictions converge, with the accumulated economic and political fallout of the pandemic. The need for reliable and actionable data, intelligence and analysis to manage fluid and high impact global risk exposures while planning for recovery is critical.”
And Continuum Economics Lead Economist Francesca Beausang said: “COVID has continued to shake the foundations of the global economy over the course of 2021. While global trade has recovered faster than expected from the initial COVID shock, disruptions to the supply chain have taken new forms and their impact has become more systemic. Meanwhile, COVID has triggered an acceleration of commitments to a green recovery, yet funding a fair transition to decarbonisation for emerging markets remains the greatest challenge to its implementation. Finally, COVID has forced a rethink of the concept of health as global public good, with a patent waiver for COVID vaccines changing the foundations of innovation in pharmaceutical research.”
