Allianz Global Corporate & Specialty (AGCS) has advised businesses to review their insurance policies and contingency plans as a rise in social unrest incidents could heighten their risk exposure, resulting in costly damages.
Strikes, riots and violent protest movements pose risks to companies because in addition to buildings or assets suffering costly material damage, business operations can also be severely disrupted with premises unable to be accessed, resulting in loss of income, notes the insurer.
Economic and insured losses from previous protests have been significant, creating significant claims for companies and their insurers. For example, the Yellow Vest movement in France, where French retailers lost $1.1bn in revenue in just a few weeks; or the 2020 protests over the death of George Floyd in police custody which are estimated to have resulted in over $2bn insured losses.
The cost-of-living crisis and the power of social media, in combination with political polarisation, fuels protest movements, according to Allianz .
Srdjan Todorovic, currently Head of Crisis Management, UK and Nordics, at AGCS, future Head of Global Political Violence & Hostile Environment Solutions at AGCS, commented: “Civil unrest increasingly represents a more critical exposure for many companies than terrorism.
“Incidences of social unrest are unlikely to abate any time soon, given the aftershocks of Covid-19, the cost-of-living crisis, and the ideological shifts that continue to divide societies around the world. Businesses need to be alert to any suspicious indicators and designate clear pathways for de-escalation and response, which anticipate and avert the potential for personnel to be injured and/or damage to business and personal property.”
The United Nations has warned of the destabilising potential of disrupted supply chains and surging food, fuel and fertiliser prices, particularly in the context of Russia and Ukraine representing around 30% of the world’s supply of wheat.
“All of this is planting the seeds for political instability and unrest around the globe,” said UN Secretary-General Antonio Guterres in March 2022. Meanwhile, the risk consulting firm Verisk Maplecroft sees a rise in civil unrest as ‘inevitable’, in middle-income countries, which were able to offer social protection during the pandemic but will now find it difficult to maintain that level of spending as the cost-of-living surges.”
The influence of social media networks plays an increasing role in mobilising protesters and intensifying social unrest. Todorovic commented: “The unifying and galvanising effect of social media on such protests is not a particularly recent phenomenon, but during the Covid crisis it combined with other potentially inflammatory factors such as political polarisation, anti-vaccination sentiment, and growing mistrust in government to create a perfect storm of discontent.”
He added: “Geography was less of a barrier too. Those with like-minded views were able to share opinions more easily and mobilise in greater numbers more quickly and effectively. In a world where trust in both government and media has fallen sharply, misinformation could take hold and partisan grievances be intensified and exploited.”