Political violence affects one in four global firms

Written by staff reporter

Violent political events are up dramatically over the last year with one in four global organisations feeling the impact, according to the latest edition of the 2017 Clements Worldwide Risk Index (CWRI), released this week in Washington. The survey, compiled twice each year, found the number of organisations suffering the effects of a political violence event nearly doubled from a year ago, up 90% over the previous report issued last spring.

More of these events were noted in Europe, rather than the usual hotspots in the Middle East or Africa. France, Germany and Brussels all made international headlines in 2016 when terrorists launched attacks that killed or harmed innocent people. Nearly 23% of respondents said they experienced political violence in Europe, while 21% reported impacts in the Middle East and just over 17% noted troubles in Africa.

“It appears that violent political events such as terrorism, war, riots, civil unrest and labour strikes are occurring more frequently, and are no longer isolated to known, politically unstable areas on the globe,” said Chris Beck, president of Clements Worldwide. “These trends make a clear case for organisations everywhere to take steps in advance to prepare in the event their region becomes the unexpected target of protests or worse.”

The leading concern for businesses when it came to political violence was the uncertainty around elections and protests associated with voting. Some 27% of respondents said they were worried about the effect of elections in countries where they operate, up from 19% the year before.

The survey reports responses from more than 500 senior risk management executives in the IT, manufacturing, construction, government, banking, transportation, non-government organisations (NGO), tourism, education and oil and gas sectors.

Probability of conflict: Source: Clements Worldwide

Kenya agreed to pay £4.2m to Rwandan and Ugandan firms after post-election violence in 2007 and 2008 led to large losses for their businesses. Around 1,200 people died and 600,000 more were displaced in clashes that erupted after the poll.
And the potential for more stories like this exists with a full slate of political contests on the 2017 docket, including elections that could result in gains for populist parties in France, Italy, the Netherlands and Germany.

Important elections taking place this year include the Netherlands General Election and Hong Kong’s Chief Executive Election later this month; France’s Presidential Election in May; Rwanda and Kenya’s general elections in August; and China’s Politburo Selection and Thailand’s General Election in late 2017.

Among other results reported, one in six respondents cited uncertainty about changes in political leadership and its subsequent effect on government policies in countries around the world as their primary concern, a new measure included in the latest Clements Worldwide Risk Index. This finding quantifies worry about such variables as the rise of nationalism on business legislation, fallout from elections, trade barriers and fluctuating currencies, with more than one-third of respondents, or 37%, surveyed saying these factors have left them uncertain about whether to expand their international operations. The finding represents a 10% increase in those having second thoughts as measured in a similar report last year.

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