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Aon finds political instability, unrest slowing economic rebound from Covid

2nd August 2021 - Author: Staff Writer

The COVID-19 pandemic has been determined by Aon to have both suppressed and aggravated terrorism and political violence risks in 2020 and 2021.

Aon’s Risk Maps are designed to help firms better understand and navigate evolving political risk and political violence exposures.

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 fell overall worldwide.

The majority of 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 was also factor.

Aon underlines how political risks have risen during 2020-2021. Seven countries experienced a deterioration in the political risk situation, and none experienced an improvement. This follows a significant uptick inflation in emerging markets (EM) in 2021, a setback for green recovery initiatives following COVID-19 and the risk of EM divergence from developed markets in terms of per capita incomes, as a result of lagging and insufficient vaccination implementation in EM.

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Rebuilding better in the wake of COVID-19, and especially rebuilding greener, has been presented as an opportunity by most international institutions, especially the European Union. The economic case for a green recovery is based on job creation and ultimately less expensive energy costs.

“The COVID-19 pandemic has complicated an already fractured landscape of geopolitical risks, which firms operating globally need to navigate,” said Vlad Bobko, Head of Crisis Management, London Global Broking Centre, Aon.

“From rising instances of civil unrest, 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 protecting against government intervention in emerging markets, sovereign and private counterparty defaults or 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.”

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