Key Types of Political Violence Businesses Should Monitor

For any multinational business with offices in countries considered to be at risk for political violence, it’s imperative that you safeguard your office and protect your employees from the threats that come from unlawful individuals or organizations.  Political risks can range from war and revolution to corruption and changes in tax laws. The countries where this risk is possible is ever expanding as we see countries that were in the recent past relatively peaceful, such as Turkey, Brazil, and Thailand, experiencing increased turbulence.

According to the Clements Worldwide Risk Index, political unrest is the number one concern among top global managers at multinational corporations and global aid and development organizations.

Pete James, Commercial Sales Executive for Clements Worldwide, notes the most traditional definitions of political risk includes acts of terrorism, civil unrest, strikes political disturbances, riots, malicious damage, sabotage, or war.

“Political violence accompanies risks that could affect people, assets, or vehicles,” James says. “Another component of political violence includes actions taken by a host government that particularly could affect a public works or infrastructure project – confiscation, expropriation, or nationalization (CEN). This is most likely to include a change of regime or government.”

For example, new government forces may decide to kick-out foreigners from these infrastructure projects such as the nationalization of gas & oil in Venezuela in 1976, creating the state-run company Petroleos de Venezuela (PDVSA). 

“Infrastructure projects are very often large multi-million dollar projects privately funded,” James says. “Therefore, the investors will not commit the funds without appropriate trade credit and currency insurance, another type of political violence insurance.”

While CEN activities are an extreme form of government intervention in private business, a change in regime can also have effect on movements of goods through customs, permits for projects, and tax liabilities.  Insurance will not protect an organization from all these possible risks.  When developing a risk management plan, contingencies should be considered for all these possibilities. 

Types of Political Violence

Political violence can take many forms and each is a serious danger that needs to be watched and guarded against. Here are some of the most common occurrences of political violence:

Terrorism: Often politically motivated, this is any act that uses violence or intimidation in the pursuit of political aims. Every year around the world, it’s estimated that individuals and organizations suffer more than 10,000 terrorist attacks, with nearly 75 percent of those resulting in at least one death, injury or kidnapping. To protect individuals and organizations abroad, Clements Worldwide offers War and Terrorism Insurance.

Domestic Terrorism: Involves violence against the civilian population or infrastructure of a nation—often by citizens of that nation and with the intent to intimidate, coerce, or influence national policy.

Riots: These relatively disorganized group acts of violence against property, agents of the political system, perceived opponents in the society or random targets are often spontaneous and can come without warning. A recent refuge riot in Germany resulted in injuries to police officers and rioters when metal pipes became part of the fight.

Protests: Any demonstration or act against a political party or government. While they are not always violent, many result in some form of violence. For instance, Brazil witnessed renewed violent antigovernment protests against high-level corruption allegations this year, which resulted in looting and robberies.

Genocide: Group political violence resulting in the murder of many members of one ethnic group by its rival. It can also take on the role of establishment violence, which is when the state organizes a campaign against a particular ethnic group.

Civil War: This results when a significant proportion of the population in a region actively supports a separatist movement and political violence emerges on a large scale. This is being felt throughout Syria as the country goes through turmoil amidst its disastrous civil war spurned on by President Bashar Assad.

Rebellions: Widespread violence involving many people who often have lost faith in the likelihood that the system will respond to their problems. Unlike riots, these are premeditated and have a lot of planning involved. There’s currently a tax revolt in Latvia, as protestors are threatening to challenge a new tax in court and to call for the finance minister to resign.

Countries to Watch

To keep abreast of the changing landscape of political risk, James recommends viewing Risk Map 2015, Control Risks’ outlook for 2015, which provides analysis at a global and country level, and signals what key risks and opportunities will face business in the year ahead, as well as providing changing risks on a daily basis; and Unity’s quarterly risk assessment report, which highlights the risks associated with international travel, particularly as it relates to kidnap & ransom.

“High-risk countries like Syria, Iraq, Afghanistan, Libya, Yemen, Somalia, South Sudan, and Pakistan have been labeled high risk for years and that does not seem like it will change anytime in the near future,” James says. “Other countries highlighted as emerging in the Unity report include Egypt, Brazil, Venezuela, Ecuador, Israel, and Nepal.”

Check out what risks your organization may face by completing the Clements risk checklist.  Let Clements help you manage all types of political risk, including kidnap & ransom risk, for your organization.  

Keeping your employees safe is our priority. Call us today at +1.202.872.0060 or 800.872.0067 or e-mail request@clements.com to discuss how we can tailor our policy to meet the size and scope of your organization. 

Complete the Clements Risk Checklist