News Release

Aon releases 2015 Terrorism and Political Violence Map

Multinational business grapples with evolving threat posed by terrorism and political violence

Terrorism and political violence present unique challenges to any company with a global footprint. Understanding the human and commercial exposures is a key aspect of risk mitigation. Now in its fifth year, Aon's Terrorism and Political Violence Map, continues to help business to closely consider and evaluate their exposures to these unique and complex risks.

Aon and Risk Advisory Group worked closely to deliver insightful analysis regarding the evolving threat posed by terrorism and political violence, with this year's map informed by work on Terrorism Tracker throughout the past year, as well as insights from previous years.

"The findings underline the complexity of this risk and the breadth of potential impacts - property damage, business interruption, casualty and liability risk. Where organisations have concerns or would like to validate their current terrorism strategy, we encourage them to connect with their broker to discuss how their insurance strategy would have responded to recent trends in terrorism as highlighted by the map," explains Darlington Munhuwani, Regional Controller for Aon Sub-Sahara Africa.

"Political violence risks are already moving to the top of many global and multinational companies' agendas. High profile crises spanned the spectrum of insurable political violence risks in 2014: our findings this year suggest 2015 is likely to see similar instability, with heightened terrorism, war, and civil unrest risks present in many regions, including among the developed economies."

From the surprise offensive in Iraq and Syria by the group that now calls itself Islamic State (ISIS), to Russia's seizure of Crimea and civil war in Ukraine, to civil unrest in the US, our findings show that political violence risks are as relevant to developed economies as the emerging markets. They show that in a hyper-connected world, faraway problems can have local effects. The pervasive nature of terrorism and political violence means that the impact can escalate and spread rapidly with little warning.

"South Africa's own recent struggle with xenophobic attacks very clearly demonstrated how events happening in South Africa had a serious and unexpected reaction and impact in other African countries, with multinational companies having to repatriate thousands of South Africans working in neighbouring countries due to threats of counter attacks. In addition, the disruption of these companies' trading activities in various countries underlined the importance of assessing all aspects of political violence and not localise the focus,"explains Darlington.

The Aon Terrorism & Political Violence Risk Map 2015, produced in partnership for the eighth year with Risk Advisory, is intended to help businesses understand and calibrate the current risk landscape. The ratings reflect general risks assessments of political violence risks, and draw heavily on empirical data and robust analytical methodologies. They provide a means to raise awareness, check exposure, and help organisations determine how they should best proceed in doing business and seeking opportunities in their chosen markets.

Key Findings

  • In 2015, Aon rated 21 countries at reduced risk and 13 at increased risk. The global trend is therefore a net improvement in political violence risks at a country by country level. This marks the second year in row where the balance is more countries improving than deteriorating (in 2014, 56 countries were at reduced risk and only four at increased risk).
  • The less positive findings this year are largely due to increased terrorism threats in the West and a more adverse geopolitical situation in Eastern Europe, the Middle East and East Asia. More countries had conflict perils added (11) than removed (5) and we added more perils for conflict than any other risk type, reflecting an increasingly dangerous and uncertain geopolitical environment. Six of the conflict additions were Former Soviet Union countries.
  • Sub-Saharan Africa has the greatest number of high to severe risk countries (16), although it is also the largest region (42% of the region rated high to severe risk, making it less risky overall than the Middle East, South Asia and North Africa). Nearly 80% of all terrorist attacks in this period occurred in just two countries – Nigeria and Somalia. Southern Africa remains a cluster of low risk.
  • The removal of the civil unrest peril in 11 countries points to an improved domestic stability situation in a number of countries, reflecting some positive trickle down risk effects of economic recovery.
  • Measured in terms of concentration of risk (regions with the highest percentage of high or severe risk countries), the riskiest regions are in order of greatest risk: South Asia, North Africa, Middle East, Sub-Saharan Africa, Asia Pacific, Latin America, Western Countries.
  • Western countries saw the greatest number of country risk rating increases, mainly due to terrorism threats. Nine countries were rated at increased risk, and none at decreased risk.
  • Latin America is the region with the most positive overall results, securing reduced unrest risk and reduced terrorism risk ratings thanks to counterterrorism progress and moves to end long running conflicts in Colombia and Peru, although ongoing socio-economic issues remain.

The risk gap between the stable and the unstable is widening, with the highest levels of political violence risk contracting around a smaller number of countries. There are 17 countries rated severe in 2015, with the largest cluster in Africa. Other clusters of severe risk are in the Middle East (Levant/Iraq), the Gulf of Aden (Somalia, Yemen) and South Asia (Afghanistan and Pakistan).

The greatest concentration of risks across the spectrum is Africa, with a contiguous block of nine severe risk countries running across the Sahel region and from Libya to the Democratic Republic of Congo. Importantly, only one country in this cluster (Nigeria) features in the ten most terrorism afflicted countries. This cluster reflects a common pattern of cause and effect in insecurity: weak state control and the effects of cross border terrorism and proliferation, safe havens, and instability.

As was the case last year, geopolitical instability remains an important and growing source of risk. Risk rating increases in Eastern Europe are largely due to Russian foreign policies that played an important role in the conflict in Ukraine. However the changing balances of power are a source of civil conflict and interstate war risk in other regions, particularly considering cuts in defence spending in the West and significant increases by Russia, China and Saudi Arabia. Chinese territorial claims in the East and South China Seas remain, and with it the underlying conflict risk ratings for its fellow disputants.

Key findings for Sub-Sahara Africa

  • Two countries rated at increased risk: Lesotho and Tanzania.
  • One country rated at decreased risk: Mozambique.
  • 16 countries with high or severe risk ratings (42% of the region).
  • 86% countries have civil commotion, strikes and unrest peril.
  • Nearly 80% of all terrorist attacks in review period occurred in just two countries – Nigeria and Somalia.
  • 16 countries with Insurrection, Revolution, Rebellion, Mutiny, Coup d'Etat, Civil War and War peril (42% of region).

"Sub-Saharan Africa is a region of polarity in risk. Southern Africa stands out as a sub-region of relative stability. However, 16 countries have high or severe risk ratings, with many of these clustered as a contiguous block stretching from west to east Africa. Discontent with incumbent governments and socioeconomic problems appear to be the main drivers of risk – 33 of the 38 countries have the civil unrest risk, and 16 have the conflict risk, also denoting coup risk.

"While terrorism has dominated much of the recent media coverage of Sub-Saharan Africa, terrorism is the least common peril in the region. Thirteen countries have attained a terrorism peril, but of these countries, five have experienced no attacks since at least the start of 2014 and nearly 80% of all attacks in this period occurred in just two countries – Nigeria and Somalia. Boko Haram in Nigeria and Al-Shabaab in Somalia are the active groups by far, and both continue to threaten economic and political stability of the respective regions.. For some countries such as Ethiopia and Uganda, the absence of more frequent attacks is due to effective counter-terrorism operations by the security forces. However, the strategies of the two main terrorist groups in Sub-Saharan Africa also go some way to explaining the localised nature of the terrorism threat," says Darlington.

Despite some internationally focused rhetoric, the attacks of both Boko Haram and Al-Shabaab indicate that both are still primarily focused on a domestic struggle. Boko Haram is attempting to undermine the authority of the Nigerian government, hold territory and as of Q1 2015, establish a new province of the so-called Islamic State. Al-Shabaab is targeting what it sees as occupying forces in ethnic-Somali lands.

The Ebola outbreak in Guinea, Liberia and Sierra Leone represented serious challenges to stability in 2014, but ultimately has not led to any changes in the overall political violence risk scores in these countries. All three retain their civil unrest peril, but none have an armed conflict or insurrection peril. While there have been protests against the governments' handling of the virus outbreak, there is nothing to suggest there is the potential for more organised and violent opposition to the government. Nor any signs that the outbreak has made the governments of the affected countries significantly more vulnerable to such opposition.

"While coverage is available across the region, the pricing of risks in sub-Saharan Africa tend to be high, due to the ‘arc of instability' running across central Africa. Troubled states, lack of governance and porous borders mean increased exposure to acts of terrorism, civil unrest and political violence. In this region, risk mitigation is paramount and risk managers need to be cognisant of these underlying threats to their people, assets and operations. The solution for companies is a combination of risk mitigation strategies which are complemented by tailored risk transfer," he adds.

Strikes and anti-government protests have been a regular occurrence in many of the countries in the region. Corruption and unequal economic development are common themes driving opposition to incumbent governments. Although in most cases, protests have posed little threat to government stability, Burkina Faso provides a recent example of how anti-government protests can escalate and lead the country into a coup or revolution. The potential for a similar escalation of anti-government movements in the Democratic Republic of Congo and Togo is a factor contributing to these two countries attaining conflict perils.

Weak state control, poor border security and endemic corruption are common to the five severe risk countries (Nigeria, Central African Republic, Democratic Republic of Congo, South Sudan and Somalia). Particularly in Central African Republic, Democratic Republic of Congo and South Sudan, the lack of central government authority has left room for armed groups to establish control over territory, and in some cases for these groups to act as substitute governments. International peacekeeping missions in these countries have proved largely ineffective at countering the destabilising effect of such armed groups. Somalia is an exception in this respect however. The African Union force and the Somali army have had considerable success in retaking strategically important towns from Al-Shabaab over the past year.

The Terrorism and Political Violence Risk Map is available online and as part of Aon's Risk Map app for both Android and iOS, enabling users to gain informed insights into trends in order to support future business decisions. For more information, visit: http://bit.ly/1cfKPwq

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