Companies must adapt to a “new normal” of increased political instability as 75 countries are forecast to see a rise in civil unrest over the next six months, according to a report.
Verisk Maplecroft’s Political Risk Outlook 2020 projected that 75 out of the 125 countries in its index will on average see an increase in civil unrest, including Tajikistan, Ukraine and Guinea Bissau.
“With protests continuing to rage across the globe, we expect both the intensity of civil unrest, as well as the total number of countries experiencing disruption, to rise over the coming 12 months,” said the report.
The report said the number of countries rated as extreme risk jumped from 12 in 2019 to 20 by early 2020, with Ethiopia, India, Lebanon, Nigeria, Pakistan and Zimbabwe joining the list.
The report said Hong Kong, which has seen months of protest against Beijing’s influence, and Chile, where a metro ticket price rise sparked unrest related to income inequality and high living costs, were the world’s riskiest locations. Verisk Maplecroft said the first month of unrest in Chile damaged an estimated $6.4bn worth of infrastructure and cost the economy around $3bn, or 1.1% of GDP.
“An extreme risk rating in the index, which measures the risks to business, reflects the highest possible threat of transport disruption, damage to company assets and physical risks to employees from violent unrest,” said the report.
“Most sectors, ranging across mining, energy, tourism, retail and financial services, have felt the impacts over the past year.
“The resulting disruption to business, national economies and investment worldwide has totalled in the billions of US dollars.”
The report said subsidy cuts were the biggest single indicator that the risk of unrest was growing in Chile, while inflation and a weakening of mechanisms that allow the channelling of discontent played a role in Chile, Hong Kong and Zimbabwe.
“The pent-up rage that has boiled over into street protests over the past year has caught most governments by surprise,” said Verisk Maplecroft.
“The next 12 months are likely to yield more of the same, and companies and investors will have to learn to adapt and live with this new normal.”
☛ Want to stay up to date with the news? Sign up to our daily bulletin.