70%
Of business leaders are concerned that the outcome of this year’s elections will impact their international operations and ability to trade.
Geopolitical Risk Snapshot 2024
In this ‘year of the election’, where over half the world’s population will have the opportunity to vote, we focus on global business executives’ concerns and perceived preparedness for geopolitical risk and their apprehension around the outcome of these elections impacting their international operations and ability to invest and trade.
From the unrest in the Middle East to the continuing conflict in Ukraine and potential changes of government in Western democracies, the sheer number of variables and how they will interact to shape geopolitics will test business strategies to the limit.
We explore what this unpredictability will mean for businesses as they grapple with increasing political risks. We also look at the essential role of insurance in mitigating these risks and the importance of robust contingency plans.
Of business leaders are concerned that the outcome of this year’s elections will impact their international operations and ability to trade.
Of corporate leaders believe they currently operate in a high-risk environment, up from 31 last year.
Said that political risk is the biggest threat they face this year, up from 27% last year.
Are unprepared to deal with political risk, up from 23% last year.
Cited war and terrorism as their number one threat, up from 22% last year.
Are unprepared to respond to events of war and terrorism, down from 27% last year.
Roddy Barnett
Head of Political Risk & Trade Credit, Beazley
Unrest and commotion in a bumper election year
As polarised political groups challenge each other at the polling booths across the world, extreme elements may use violence to influence, intimidate or lash out if the results don’t go their way, heightening the risk of political violence, strikes, riots and civil commotion.
The energy transition tug of war
As governments implement measures to keep the rise in global temperatures below 1.5°c, the focus on the critical minerals and metals essential to enabling the global renewable energy transition is intensifying. With the rare earth minerals and metals at the heart of this transition located in politically unstable regions of the world, navigating political risk is critical.
Navigating the opportunities
Political instability, military coups, civil unrest, and geopolitical tensions present barriers and heightened risk for investors in Africa’s energy infrastructure, critical to the local population and the ability to mine increasingly important and valuable minerals required for the world’s renewable energy transition.
Alex Hill
Focus Group Leader - Political and Terrorism Claims, Beazley
Our research data found that 30% of corporate leaders globally viewed political risk (including political violence) as their top geopolitical threat in 2024 – rising from 27% last year, to 32% this year, and concern over this risk is predicted to remain elevated going into 2025.
The potential for discord does not just hinge on elections, other political issues are also acting as a catalyst for unrest. In France, last year, there were disruptive protests and riots over proposed pension reforms. In 2020, the US and UK saw large Black Lives Matter demonstrations following the deaths of George Floyd and Breonna Taylor. Around 10,600 demonstrations were recorded and, while 95% were peaceful, 5% spilled over into violence causing property damage and business interruption¹.
Our research finds that a quarter (25%) of global business leaders feel unprepared to deal with the volatile risk landscape and increased threat of political violence.
Chris Parker
Head of Terrorism and Deadly Weapons Protection, Beazley
Since our Risk & Resilience research first began in 2021, the perceived threat of war and terrorism risk among global business leaders has increased significantly, rising from 15% in 2021 to 25% now.
Historically, specialist risk insurance coverage has been an afterthought. Acquired at points of clear, precise risk and acute exposure. However, this is changing. Political Risk insurance can mitigate financial risk enabling businesses to pursue investments amidst the maelstrom of global or local political upheavals. It is recognised by sovereign wealth funds, private equity and other lenders as a key element of a finance deal for projects in less stable regions of the world.
With the prospect of political change in over 60 countries, and ongoing war and political tensions increasing the world has rarely felt so volatile. This uncertainty can breed business inaction. Specialty insurance can help break this inertia, providing businesses with the financial security required to manage the downside risk, embark on investments, and pursue innovations that will be critical to the world’s future economy.
Fighting with police, metal barriers launched by angry crowds, officers throwing tear gas grenades into protestors – these are all memories of the unrest in Washington during the 6th January 2021 Capitol Hill riots.
As domestic markets become increasingly crowded and competitive, international expansion is rising up the boardroom agenda.
Where and when politics will turn violent can be hard to predict. Yet, history serves as a useful guide. With many polarised elections taking place in 2024, tensions are likely to be running high.
¹ Demonstrations and Political Violence in America: New Data for Summer 2020 (acleddata.com)
The information set forth in this document is intended as general risk management information. It is made available with the understanding that Beazley does not render legal services or advice. It should not be construed or relied upon as legal advice and is not intended as a substitute for consultation with counsel. Beazley has not examined and/ or had access to any particular circumstances, needs, contracts and/or operations of any party having access to this document. There may be specific issues under applicable law, or related to the particular circumstances of your contracts or operations, for which you may wish the assistance of counsel. Although reasonable care has been taken in preparing the information set forth in this document, Beazley accepts no responsibility for any errors it may contain or for any losses allegedly attributable to this information. BZCP050.