Businesses should prepare for a rise in civil unrest incidents as the cost-of-living crisis follows hot on the heels of the COVID-19 pandemic, according to Allianz Global Corporate & Specialty (AGCS).
With confidence in traditional sources of information and leadership being undermined, the role of social media platforms in activating civil unrest is becoming increasingly influential. 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, said AGCS.
“Civil unrest increasingly represents a more critical exposure for many companies than terrorism,” said AGCS head of global political violence and hostile environment solutions Srdjan Todorovic.
“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 UN has warned of the destabilising potential of disrupted supply chains and surging food, fuel and fertilizer 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, risk consulting firm Verisk Maplecroft sees a rise in civil unrest as being 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.
According to the Verisk Civil Unrest Index Projections, 75 countries could see an increase in protests by late 2022, resulting in, for example, a higher frequency of unrest and more damage to infrastructure and buildings.
The outlook is most bleak for the 34 countries that face significant deterioration by August 2022. More than a third of these states are in Europe and Central Europe (12), followed by the Americas (10), Africa (6), Middle East and North Africa (3) and Asia (3).
The influence of social media networks plays an increasing role in mobilising protesters and intensifying social unrest. “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,” said Mr Todorovic.
“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.” M