Businesses need to prepare for an increase in incidents related to civil unrest as strikes and protests could disrupt operations and damage property. According to a report from Allianz Global Corporate & Specialty (AGCS), increasing societal tensions will likely be fueled by rising inflation and increasing food and energy prices due to shortages caused by Russia’s invasion of Ukraine. Meanwhile, unchecked disinformation on social media may inflame public anger over the way governments and employers navigate the pandemic, a turbulent economy and the precarious job market.
“Civil unrest increasingly represents a more critical exposure for many companies than terrorism,” said Srdjan Todorovic, head of global political violence and hostile environment solutions at AGCS. “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.”
In its Civil Unrest Index Projections, risk consultancy Verisk Maplecroft predicted that 75 countries will likely see an increase in protests by late 2022, resulting in a higher frequency of unrest and greater potential for damage to infrastructure and buildings. Historically, the financial fallout from protests has been significant. Sparked by rising fuel prices and economic inequality in 2018, the Yellow Vest movement in France cost retailers an estimated $1.1 billion in just a few weeks. In 2019, a hike in subway fares led to large-scale demonstrations in Chile and $3 billion in insured losses. In July 2021, protests fueled by economic and political tensions in South Africa caused damage worth $1.7 billion. This year, demonstrations against COVID-19 restrictions in Canada, France and New Zealand have disrupted businesses, forcing many companies to halt operations or take other precautions.
Planning for the Worst
With the risk of civil unrest likely to increase, it is important that companies have plans in place so that they can continue to operate and keep staff safe. The foundation of any successful plan is ensuring that people are aware of their roles and know what they should do as events unfold. “These situations can move quickly, so have a plan that the company can follow that is fluid enough to cope with rapid changes,” Todorovic said. “Those companies that try to react as events occur—rather than get ahead of events—often pay a much worse price.”
As part of the planning process, companies should conduct threat analyses, vulnerability assessments, consequence analyses and security audits on a regular and ongoing basis. Unrest can occur simultaneously in multiple locations, so companies need to bear in mind that they may suffer multiple losses from a single event. For example, a retailer with multiple stores in a city center faces an increased risk that one or several of its locations could be damaged.
To protect buildings and physical infrastructure, Todorovic recommends limiting the number of entrances that can be used, closing off back entrances, and ensuring windows are reinforced or have shutters. Retailers should move stock away from front windows to make the store a less attractive potential target. Strong exterior lighting may also help deter vandalism because of the increased visibility.
To keep employees safe, consider closing the business before or during high-risk periods or ask staff to work from home, if possible. Companies should also set up contact lists using phone, email and social media apps to keep employees informed of the latest developments, threat levels and advice. If employees need to work on the premises, companies should have evacuation plans in place that detail how staff should leave and a designated location where they should meet.
Companies should prepare statements in advance for both employees and the media that can be communicated when certain events occur, such as when a building is closed or when employees should work from home. It is also critical to appoint a spokesperson to provide official updates. This does not need to be the president or CEO, but the person should have management’s backing.
In addition, companies need to review and update their business contingency plans and consider any supply chain vulnerabilities. If applicable, risk professionals should check any relevant contracts with landlords and building owners to determine who is responsible for the security of facilities, Todorovic said. It is also important for companies to review their insurance policies in the event of increasing local unrest activity to ensure these include proper limits and terms. Some property policies may cover certain political violence claims. For organizations at increased risk, specialized policies are available to ensure coverage in the event of strikes, protests and civil commotion.
Recognizing the Signs
One of the mistakes many companies make is failing to pick up on the “tell-tale” signs that unrest is likely to occur or act quickly enough when they see events unfold. “It is ok to observe risks developing, but you are putting yourselves in serious danger [if you do not] have a plan to respond to them as they escalate,” said Henry Wilkinson, chief intelligence officer at specialist geopolitical risk consultancy Dragonfly.
For example, there is usually a build-up of societal pressure stemming from conditions like rising food, fuel and commodity prices that can provide a good indicator that trouble may be brewing. To help form a response, he recommended examining broader trends and assessing how these issues are likely to affect specific countries or regions. In some regions, for example, civil unrest has more chance of occurring at certain times of the year, such as during hot weather, in months when there is a lot of seasonal unemployment, or when school is out.
“Looking at how governments, local authorities, police and the military respond to the issues they are facing can give you a very strong indication of how well—or badly—they are dealing with the situation and whether it could get worse,” he said.
Companies should establish a normal baseline for a particular region and what the level of acceptable social risk might be. They also need to think about what kind of disruption they are likely to experience to determine the best response. For example, a company’s response to travel restrictions, fuel rationing and electricity blackouts will be very different than the actions required to deal with strikes, protests, road closures, ramp-ups of security, police/military cordons, curfews and threats of arrest.
To help measure and plan against risk, “look at the scale, frequency, level of violence and/or intensity, and geographic area where it is most likely to occur,” Wilkinson said. “Look at the make-up of the people involved in the protests and the numbers. Students tend to be more politically active than other parts of society, but if they are protesting in large numbers, this is a cause for concern. Additionally, if the protest has a broad base of support, the cause could be so popular as to attract interest from a significant proportion of society, which means unrest could go on for weeks or months rather than days.”
Companies can also take more proactive measures to reduce their risk by reconsidering the way they respond to civil unrest in the first place. “Employers can get ahead of the situation by doing the right thing,” said Livia Paggi, partner and head of political risk at risk consultancy GPW. “If inflation is rising dramatically, companies can increase wages, provide one-off or temporary bonuses, and subsidize healthcare and travel to and from work. They can also do more to help the local communities in which they operate, such as contributing to foodbanks if families need support or helping to maintain play areas for children. These types of actions can have enormous positive impacts on the workforce and the local population.”