Businesses Must Prepare for Rising Global Tensions and Political Violence, Says Beazley

Businesses around the world are facing increasing risks of political violence and property damage amid rising global tensions, according to a recent report from insurer Beazley P.L.C. The study, titled “Geopolitical Risk Snapshot 2024,” highlights the potential impact of this year’s surge in global elections on businesses and the need for robust risk mitigation strategies.

The report reveals that 70% of global business leaders are concerned about how the outcome of this year’s elections could affect their international operations and ability to trade. Additionally, 36% of corporate leaders globally believe they operate in a high-risk environment, with 30% stating that political risk is the biggest threat they face this year.

In the United States, 33% of executives believe they operate in a high-risk environment, while 32% reported that political risk is their biggest threat. In Canada, 38% of business leaders see themselves in a high-risk environment, with 25% citing war and terrorism risk as their biggest threat.

The report warns that political polarization fueled by social media and misinformation could lead to violence and property damage. Recent examples of political violence, such as the storming of the Capitol in the U.S. in 2021 and violent protests following the 2019 election in Jakarta, Indonesia, serve as stark reminders of these risks.

Furthermore, the study highlights the risks associated with mining critical minerals for the energy transition, as many mining sites are located in politically unstable regions. Businesses are urged to develop proactive contingency plans for macroeconomic and political risks they are exposed to, including diversification of supply and understanding local investment risk.

Despite challenges such as corruption and civil unrest, the report suggests that Africa has the potential to become an economic powerhouse driven by renewable energy. However, political instability and corruption scandals have deterred many investors from the continent.

Beazley emphasizes the importance of recognizing geopolitical risks and implementing early mitigation measures for businesses looking to invest in less politically stable areas. The report also calls on insurers to develop risk mitigation solutions to help clients build more resilient businesses in a challenging geopolitical environment.

To read the full report, visit the Beazley website.