Businesses' resilience to risks alters in 2022
Source: Middle East Insurance Review | Aug 2022
Beazley’s latest risk and resilience research into geopolitical risk shows that events so far this year have significantly altered business leaders’ perceptions of the risks they face and their resilience to those risks, which has fallen dramatically since 2021.
According to the new research the impact of inflation is also causing deep concerns about domestic stability alongside the fear that global tensions are increasing the threat from external forces. As businesses struggle to adjust to this new reality, preparedness and mitigation strategies are becoming a major focus.
The research report ‘Spotlight on Geopolitical risk’ shows that across the UK and US, few business leaders feel well able to manage current geopolitical risks. Concerns about the possible consequences of war are spiking upwards compared with last year, and inflation has become a dominant issue.
The report also said it is urgent that businesses build their resilience as we face a high risk/low resilience geopolitical environment.
Economic uncertainty is up 31% on the year before and rising prices and an unpredictable economic environment are driving instability and civil unrest as we have already seen in Sri Lanka, with countries such as Egypt and Turkey possibly vulnerable too.
The research said US business must confront the double threat of unpredictability at home from rising gun violence, whilst as a world superpower it is facing up to a watershed in geopolitics as its relationship with Russia and China shifts.
Business leaders need to understand their geopolitical risks better and prepare for and seek to mitigate them where possible. Specialist political risk, trade credit and terrorism insurers have a role to play in providing appropriate cover that provides the risk mitigation that they need.
Businesses need to know that as they face a moment of geopolitical change, which is fraught with unpredictability, they can protect overseas physical assets and their human capital both at home and abroad, by actively investing in a mixture of risk management and effective insurance cover. M