The power of social media combined with political polarization fuels protest movements.
June 17, 2022 †
Businesses need to prepare for an increase in civil unrest as the cost-of-living crisis follows the Covid pandemic hard on its heels, according to insurance company Allianz Global Corporate & Specialty (AGCS). As trust in traditional sources of information and leadership is undermined, the role of social media platforms in promoting civil unrest is becoming increasingly influential.
Strikes, riots and violent protest movements pose a risk to businesses because not only buildings or assets can suffer costly material damage, but also business operations can be severely disrupted by inaccessibility of buildings, resulting in loss of income.
“Social unrest is increasingly a more critical risk than terrorism for many companies,” said Srdjan Todorovic, currently Head of Crisis Management, UK and Nordic, at AGCS (from 1 July, Todorovic will be Head of Global Political Violence & Hostile Environment Solutions at AGCS). “Social unrest is unlikely to subside in the near future due to the aftermath of Covid-19, the cost-of-living crisis and the ideological shifts that continue to divide communities around the world. Businesses need to be aware of suspicious indicators and cope with implementation of deployment, escalation and response processes to anticipate potential damage to personnel and damage to business and personal property.
The UN has warned of the destabilizing potential of disrupted supply chains and soaring food, fuel and fertilizer prices, particularly in the case of Russia and Ukraine, which account for about 30 percent of the world’s wheat supply. “All of this is sowing the seeds of political instability and unrest in the world,” said UN Secretary-General Antonio Guterres in March 2022. Meanwhile, risk adviser Verisk Maplecroft sees an increase in civil unrest as inevitable in middle-income countries that could provide social protection during the pandemic. but now will have difficulty maintaining that level of expenditure as the cost of living rises.
According to Verisk Civil Unrest Index Projections, 75 countries are likely to experience an increase in protests by the end of 2022, leading to a higher frequency of unrest and more damage to infrastructure and buildings, for example. The outlook is darkest for the 34 countries where the situation will worsen significantly in August 2022. More than a third of these countries are located in Europe and Central Europe (12), followed by the Americas (10), Africa (6), the Middle East and North Africa ( 3) and Asia (3).
The economic and insurance losses from previous protests have been significant, leading to significant demands on companies and their insurance companies. In 2018, the Yellow West movement in France rioted to protest fuel prices and economic inequality, causing French retailers to lose $ 1.1 billion in revenue in a matter of weeks. A year later, large-scale demonstrations in Chile were triggered by a rise in metro prices, leading to insured losses of 3 billion. In the United States, the 2020 protests over George Floyd’s death in police custody are estimated to have resulted in more than $ 2 billion in insured losses, while the South African riots in July 2021 that followed the arrest of former President Jacob Zuma and were driven by layoffs and economic inequality, causing $ 1.7 billion in damages. Earlier this year, demonstrations against Covid-19 restrictions took place in Canada, France and New Zealand, including by convoys of vehicles disrupting major cities.
A network of disturbances
The influence of social media is playing an increasing role in mobilizing protesters and boosting social unrest. “The unifying and encouraging effect of social media on such protests is not a particularly recent phenomenon, but during the Covid crisis it combined with other potentially flammable factors such as political polarization, anti-vaccination sentiment and the growing distrust of the government for a perfect storm of discontent, “says Todorovic. “Geography was also less of a barrier. Like-minded people could more easily exchange ideas and mobilize larger numbers faster and more efficiently. In a world where trust in both government and the media has plummeted, misinformation could take over and party political complaints could be burned and exploited. “
Targets for civil unrest or consequential damage may include public buildings, transport infrastructure, supply chains, retail properties, foreign-owned companies, gas stations, critical goods distribution centers and tourism or hospitality companies.
Companies should review and update their business contingency plans as needed, taking into account any vulnerabilities in the supply chain. They should also review their insurance policies in case of increasing local unrest. Non-life insurance covers claims related to political violence in some cases, but insurers provide specialized coverage to mitigate the effects of strikes, riots and civil unrest (SRCC).
“The map of threats of political violence is evolving as some democracies become unstable and some autocracies crack down on dissidents. Unrest can occur in several places simultaneously, as social media now allows for rapid mobilization of protesters. “For example, large retail chains” like several losses in an event in different parts of a country, “says Todorovic.
How companies can prepare and avoid the worst
The best way for companies to prepare for or respond to such civil unrest depends on many factors, including the nature of the event that triggers the unrest, the proximity to the site, and the type of business. Allianz Risk Consulting has compiled a list of technical recommendations for companies and individuals to reduce the risks of civil unrest, taking into account these variables and the associated ways of de-escalating, communicating and responding. See the ARC-Civil-Unrest.PDF (allianz.com) Remedy Bulletin.