The 2020 Risk Maps report published by Aon in partnership with the Risk Advisory Group and Continuum Economics has revealed that the COVID-19 pandemic will likely transform the geopolitical landscape and have profound socioeconomic implications.
The report said that the extraordinary public health measures and a precipitous drop in global trade will continue to exert significant pressure on economies and governments and reshape long-standing geopolitical norms.
Developed economies to be majorly impacted
Aon’s report found that three in five developed economies face the potential of strikes, riots and civil unrest in 2020, with the COVID-19 pandemic deepening those concerns.
Countries that rely heavily on tourism or retail, or where there is a higher human toll from the pandemic, will face greater potential for civil unrest and government-focused protest, a risk that was already elevated prior to the pandemic.
The pandemic will also test supply chain resilience, as economic nationalism in the form of expropriation, currency controls and trade restrictions and near-shoring curbs globalisation.
Additional economic consequences include labour market disruption, consumer anxiety that restricts overall consumption, wider risk premiums for equities and corporate debt, and restriction in corporate bond issuance and lending.
Heightening terrorism threats
The report found that nearly half of all countries and territories face some degree of terrorism risk in 2020. This ratio is higher than last year and reflects a more widespread threat of terrorism, motivated by a range of extremist ideologies and causes.
Extreme right-wing terrorist attacks have increased in frequency for at least five consecutive years and have doubled globally in the last three years. Aon’s head of crisis management global broking centre Vlad Bobko said that COVID-19 is shaping up to be one of the most disruptive, world-changing events in living memory.
“The pandemic has transformed the way we live and work, and new challenges have appeared across industries and territories. And in an increasingly complex and volatile business environment, informed decision-making has never been more important,” he said.
A turning point in global risk
Aon has through its crisis management practice been supporting clients seeking to navigate these
“Whether it’s insulating against government intervention in emerging markets, sovereign and private counterparty defaults, or protecting people and operations from the threats posed by civil unrest, terrorism and kidnapping, our goal is to help protect against – and mitigate – a host of client exposures,” said Mr Bobko.
The Risk Advisory Group head of Intelligence & analysis and director Henry Wilkinson said that the COVID-19 pandemic is a turning point in global risk and countries with an underlying risk of instability are likely to see negative trends accelerate as restrictions lift globally, with unrest and terrorism risks likely to rise.
“Old as well as new geopolitical fault lines are unsettling and becoming flashpoints, making crises and conflicts between states even more likely than in 2019. Businesses will need new strategies and tools to manage their exposure to survive and thrive. High-quality intelligence advice and data is a critical investment,” he said.