COVID-19 pandemic suppressed and aggravated terrorism and political violence risks in 2020

COVID-19 pandemic suppressed and aggravated terrorism and political violence risks in 2020

The 2021 Risk Maps report, finds that the Covid-19 pandemic both suppressed and aggravated terrorism and political violence risks in 2020. 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.

Aon developed the 2021 Risk Maps in partnership with Continuum Economics and Dragonfly, which examine political risk, terrorism and political violence globally. Aon’s Risk Maps are designed to help firms better understand and navigate evolving the political risk and political violence exposures created by these uniquely challenging risks. In today’s complex geopolitical and economic environment, the maps enable clients to identify and track the different sources and degrees of risk, assisting businesses in planning and protecting assets, contracts and loans that could be adversely affected.

Restrictions dampen terrorism and political violence, but uptick expected: 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 45% – with surges in incidents mainly accompanying an easing of restrictions. As a result, terrorist attacks by both 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.

Jihadist violence rose overall by 20% 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. The sharp rise in civil unrest and insurrection risks in the US shows that democratic governance in a time of profound crisis is particularly vulnerable to challenges

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 end-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.

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

“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,” said Vlad Bobko, head of Crisis Management, Global Broking Centre, Aon.

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.”

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.”

 

Dragonfly is the new identity of the former Intelligence & Analysis practice of The Risk Advisory Group. Dragonfly is a geopolitical and security intelligence service for the world’s leading organisations. From the highest risk environments to the boardroom, Dragonfly enables its clients to make confident decisions and put them ahead of risks to achieve their goals. Dragonfly goes beyond the limits of real-time information to deliver early warning intelligence, by fusing the multiplying power of knowledge, data, technology, service, capability and human expertise. Its flagship Security Intelligence & Analysis Service (SIAS) provides bespoke, forward-looking and actionable all-source security intelligence, including in-depth assessment, risk modelling and analytics.

An interactive copy of the report can be downloaded here https://www.dragonflyintelligence.com/campaigns/terrorism-political-violence-risk-map-2021/



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