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Political Unrest and Business Interruption Joins List Causing Delayed and Cancelled Global Expansion
WASHINGTON, DC --(Marketwired - January 19, 2016) - The number of global risk managers citing terrorism as their top concern has doubled over the past year to 22% according to the Clements Worldwide Risk Index, a new survey released today by leading international insurance provider Clements Worldwide. Such a jump reflects that managers at the surveyed multinational corporations and humanitarian aid organizations see terrorism as a risk that needs to be increasingly contained in key areas of operations -- not just war zones. Terrorism concerns, in addition to other fears regarding political unrest and business interruption and supply chain disruption, have led a significant 27% of global organizations to delay or even cancel investment and expansion.
Cyber terrorism, and the subsequent liability that follows, was ranked as the top concern by 27% of respondents and the source of highest losses by 22% -- another category where attacks are becoming more common and unpredictable.
"The last decade has seen a dramatic increase in instability and even violence," said Chris Beck, president of Clements Worldwide. "These risks impact individual safety, operational planning and organizational liability. Ever increasing unpredictability is the new normal for which organizations need to be prepared."
One in five managers surveyed reported losses in the past five years due to terrorism, while 24% claimed damages due to political and labor unrest. These losses, along with kidnappings and other risks, are impacting global investment and humanitarian aid activity. Political violence, encompassing civil disobedience, economic or election protests, and currency exchange volatility play an increased role in ongoing operations of multinational corporations and global aid organizations.
The survey also highlighted the gap between risk concerns and losses and internal readiness to manage them, while pointing to the fact that some risk managers are becoming more focused on preparation for key risks. Even though surveyed managers perceive heightened risks associated with terrorism, only 16% say they are as prepared as they could be to address them.
That does not mean action cannot be taken to protect staff and assets as risk managers become more accustomed to a particular type of risk. For example, with political and labor unrest, which may be considered more commonplace than terrorism, the percentage of risk managers feeling "most prepared" increased from 12% in the Summer 2015 Clements Worldwide Risk Index to 20% in the latest Index, highlighting that as managers become more familiar with a risk like political unrest they can work to significantly improve their preparedness. According to the Aid Worker Security Database, 2013 was the riskiest year documented for aid workers, with record numbers of deaths and injuries. While those numbers were lower in 2015, they remain at elevated levels, but may reflect that focused efforts on security and staff safety are paying off.
Similarly, costs associated with risks that are seeing aggressive review and preparation, such as medical costs for international staff, are decreasing proportionally. Medical-related expenses went from being ranked first in the Summer 2015 Risk Clements Worldwide Risk Index at 30% to fourth at 23% in the most recent survey, while being ranked by risk managers as the category for which they feel most prepared.
"Business as usual is a thing of the past," said Beck. "Concerns outlined in the Clements Worldwide Risk Index unfortunately reflect the uncertain environment in which all organizations increasingly operate. The good news is this world of heightened risk can be mitigated with proper planning and appropriate investment in sound strategies and the right products."
About the Clements Worldwide Risk Index
The Clements Worldwide Risk Index is based on an online survey conducted from October 2015 to November 2015. Risk and other managers in 420 global organizations in the global humanitarian aid, oil and gas, logistics and other sectors participated in this second survey. For more information on the Clements Worldwide Risk Index and its methodology, visit www.clements.com/riskindex.
About Clements Worldwide
Clements Worldwide is a leading insurance provider for expatriates and international organizations. Founded in 1947, Clements offers international car, property, term life, health, specialty and high-risk insurance in over 170 countries. With offices in Washington, D.C., London, and Dubai, Clements delivers comprehensive and customized coverage, superior customer service, and unparalleled claims response. To learn more or receive a quote online, visit www.clements.com.