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Strikes, riots and civil commotion (SRCC)��activity can impact businesses in many ways.��Those in the immediate vicinity of unrest can��suffer business interruption losses and material��damage to property or assets, while indirect��damage can be inflicted on companies in the��form of ‘loss of attraction’ or ‘denial of access’ to��their premises.

As unrest can now spread more quickly and��widely – thanks in part to the power of social��media – financial costs are mounting.��Economic and insured losses from protests can��be considerable, resulting in significant claims��for companies and their insurers.

“Incidences of SRCC have not only increased in recent years, but have become more intense and catastrophic,” says Srdjan Todorovic, Head of Political Violence and Hostile Environment Solutions at �ǿմ�ý Commercial. “We have seen multibillion-dollar events in America, Chile, and Colombia. The threat is changing, and although many of the reasons for it are universal – whether economic, political, or environmental – it plays out differently in different regions, with various levels of violence and disruption. The rapid galvanizing effect of social media means unrest can occur in multiple locations simultaneously, and retail chains, for example, can suffer multiple losses in one event.”

Depending on the nature of the unrest, targets or casualties could include:

• Government, army or police buildings or infrastructure
• Transport infrastructure and hubs
• Retail premises, particularly those with high-value assets; pharmacies; those that are foreign-owned or represent globalization and/or the economic interests of a former colonial power
• Private enterprises, including those that are foreign-owned or believed to have supported an unpopular government
• Critical assets, such as petrol stations, or those of high value
• Distribution centers for critical goods and assets
• Tourism and hospitality businesses, including those in countries that international governments have deemed inadvisable for non-essential travel
• Supply chains – if disrupted, this could lead to resource nationalism as governments attempt to ensure supply of essential goods to their own countries.

Global inflation is expected to fall from 8.8% in 2022 to 6.6% in 2023, according��to the ��[13]. However, the after-effects of multi-decade��highs in inflation rates around the world, largely attributable to rising��energy prices and the war in Ukraine, continue to take their toll. Supply chain��shocks, market volatility, and surging costs for food, fuel, fertilizer, and debt��have seen the cost-of-living soar. Inflation rates above 10% were not uncommon��around the world in 2022, with Argentina reaching a high of 94.8% and Turkey��84.4%. Protests about the cost of fuel have been widespread and occurred on��every continent apart from Antarctica and up to [14] people now face��acute food insecurity, estimates The World Food Programme.��

Socioeconomic pressures appear to be intensifying. [15] shows 48 countries registered an uptick in risk in 2022 – the��biggest-ever rise – including many in Europe. “As the social pressure cooker��proves increasingly unable to contain the discontent of populations facing��protracted economic hardship, the frequency and magnitude of the backlash��against political institutions will remain near boiling point throughout 2023,”��says Jimena Blanco, Chief Analyst at Verisk Maplecroft.

“The cost-of-living protests have not been confined to the poorer nations of the��Global South,” says Srdjan Todorovic, Head of Political Violence and Hostile��Environment Solutions at �ǿմ�ý Commercial. “In the UK alone, there have been at least [16], causing disruption over multiple��days, with more disruption planned for coming months. However, the nations��with deeper pockets, those that are fiscally astute and stable, are better able to��mitigate the economic impacts of inflation on their populations.��

“Most economic protests have been allied with the left-wing of the political��spectrum, linked to trade unions or organizations calling for reforms, but there��have been protests about price hikes by the far right, too, such as in Germany, a��country that is financially stable,” says Todorovic. In October 2022, ��[17] took place in Berlin, organized by the hard-right Alternative��for Germany (AfD), attracting 10,000 people. “We’ve also seen an uptick in��far-right activities in France,” adds Todorovic. Thirteen members of a far-right��social media group went on trial in January [2023] for plotting to assassinate��President Macron.

“The concern is, what happens if far-right protests escalate in poorer countries,��with fewer resources to mitigate economic hardship and address grievances.��We could see growing violence against minority communities in these countries,��leading to increases in crime and disorder. Galvanizing the far-right vote��could also lead to changes in government policy or governments themselves,��heightening uncertainty. In the EU, for example, we’ve seen that far-right��politicians are less likely to practice moderate politics. They depend upon – and��grow in – division,” says Todorovic.

Governments that are thought to be corrupt or perceived to have been in power for too long can bring people out on to the streets. Economic grievances about food, fuel, pay, or pensions can expand from issues-led demonstrations to wider anti-government movements. In 2022 and early 2023 protests ignited over the rights of women and minorities in Iran, fuel prices in Kazakhstan, economic failures in Sri Lanka, abortion rights in the US, and Covid restrictions in China. Europe continues to be hit by multiple strikes over pay and working conditions. Political instability in Peru, Brazil and Argentina has also resulted in widespread and violent protest.

In response to civil unrest, authoritarian governments were more likely to use lethal force against protesters – authorities in countries deemed ��[18] in the Global Protest Tracker ��[19] in 2022 – three times the share in ‘partly free’ countries and six times the proportion in ‘free’ countries. “And those governments didn’t just clamp down physically on protesters. Many autocratic regimes sought to limit access to the internet, social media, and the use of apps,” says Etienne Cheret, Regional Practice Group Leader, Crisis Management, for the Mediterranean & Africa Region, at �ǿմ�ý Commercial. “They know how much the exposure of unrest has been amplified by the power of social media.”

Governments are now distrusted in 16 of the 28 countries surveyed for the [20] in 2022, including the US (42%), the UK (37%), Japan (33%) and Argentina (20%). The media is distrusted in 15 of the 28 countries, including Germany (47%), the US (43%), Australia (38%) and South Korea (27%).

Political divisions are stoking tensions around��the world, as the gaps between ideologies��and incomes grow wider. Although global��inequality has decreased over the past 30��years, [21] particularly in advanced economies, almost��90% of which have seen an increase. This can��undermine social cohesion.��

In some countries, polarizing leaders have��sought to inflame resentments by calling for��radical policy change, disputing election results,��or playing on nationalist sentiment. Polarized��opinions can become particularly entrenched��on social media platforms, which create ‘echo��chambers’ where personal views are amplified��and reinforced.��

“Countries with a high level of polarized��politics, such as Argentina, the US, and South��Africa, for example, are perceived by many��to carry a higher risk of unrest,” says Etienne��Cheret, Regional Practice Group Leader,��Crisis Management, for the Mediterranean &��Africa Region, at �ǿմ�ý Commercial. “Where protests are��particularly disruptive, there is also the danger��of counter-movements in retaliation, which can��escalate conflict.”

The perfect storm of socioeconomic and political factors has driven anti-government protests to new highs, fueled by a sense of injustice, whether it’s economic, racial, political, religious, or ethnic. A proliferation of social media platforms offers forums for discussion and communication tools for gathering, allowing large or multiple groups to coordinate within a short period of time and giving voice to those who feel underrepresented or unheard. In recent years, movements that have been significantly galvanized by social media include the global Occupy movement against economic inequality, the Black Lives Matter protests highlighting racial inequality, the #MeToo movement against sexual abuse and harassment, and the Stop the Steal campaign, which falsely claimed electoral fraud in the election of US president Joe Biden.

“Where politics are polarized, people can feel a greater sense that their personal values are under attack and will take to the streets to defend them,” says Srdjan Todorovic, Head of Political Violence and Hostile Environment Solutions at �ǿմ�ý Commercial.

Populist politicians and those with anti-establishment sentiment, bolstered by social media, have amplified grievances around the perceived loss of civil liberties, fiscal policies, or elites, which has given rise to conspiracy theories and the spread of disinformation.

“Riots can erupt as a result around a single flashpoint, such as a heavy-handed response by authorities that is deemed unjust,” Todorovic continues. “These can then escalate across a wider area, with larger numbers of people involved, to become civil commotion. If this spills over into violence and opportunism, businesses can be vulnerable to property damage and looting. We saw this in London in 2011, after peaceful protests at the shooting of a black man by police escalated into violent unrest across the capital and other English cities, with social media a contributory factor. An estimated [22] was done to retailers and businesses in London alone.”

In the UK, Just Stop Oil activists poured soup on a Van Gogh painting, in the Netherlands Greenpeace and Extinction Rebellion activists sat around private jets at Schiphol Airport to prevent them leaving, and in Germany, climate campaigner Greta Thunberg was pictured being carried by police from a protest to stop an abandoned village being demolished to make way for a coalmine. Environmental protestors made colorful headlines in 2022, and continue to do so in 2023, as they drew attention to their cause.

“Climate change demonstrations tend not to be violent, but they can be disruptive, particularly if they affect transport infrastructure. We expect this kind of activity to continue, if not escalate, in the coming year,” says Etienne Cheret, Regional Practice Group Leader, Crisis Management, for the Mediterranean & Africa Region, at �ǿմ�ý Commercial.

“Where governments are seen to row back on climate-change progress, such as fracking or reopening coalmines as a solution to reliance on Russian gas, there could be unrest. Businesses that are deemed to profit excessively from fossil fuels while many people struggle to put food on the table could be targeted. This is connected to wider concerns around ESG – environmental, social, and governance issues – which have been rising up the agenda for a few years.”

In addition, climate change has contributed to rising food insecurity as agricultural yields and supply chains, including shipping waterways, have been impacted. If there are price hikes or food shortages as a result it could spark further unrest in the future.

“Incidences of civil unrest can be difficult to predict because they often start with a specific trigger such as a change in government, a piece of new legislation or a sudden price rise,” says Etienne Cheret, Regional Practice Group Leader, Crisis Management, for the Mediterranean & Africa Region, at �ǿմ�ý Commercial. “The public pushback we saw in China against Covid restrictions at the end of 2022 was surprising in its intensity and triggered by a horrific fire in an apartment block. Violent unrest in the relatively stable West African nation of Senegal in 2021 was sparked by the arrest of an opposition politician on rape and insurrection charges. These events took many by surprise.

“One of the regions that we are most watchful of at the moment is North Africa. It is highly dependent on wheat imported from Ukraine and Russia and is exposed to price shocks in food and energy. We’ve seen a democratic backslide in Tunisia, which is significant, as it was the cradle of the Arab Spring and widely believed to be the region’s success story in terms of democratic transition.”

“Latin America is also a region in flux, with Brazil, Peru and Argentina particularly on our radar,” adds Srdjan Todorovic, Head of Political Violence and Hostile Environment Solutions at �ǿմ�ý Commercial. “Politics in the region can be volatile and polarized, and instability can be compounded by organized crime in some areas. Governments can veer from left to right every two or three electoral cycles and in between you see counter-movements developing. This kind of political shifting is rarely positive for progress or growth.

“Elsewhere, we are keeping an eye on the movement of the far right in mainland Europe. The outcome of the corruption trial of former president Jacob Zuma in South Africa could be a flashpoint, and China may be vulnerable if the government is unable to cope with a steep rise in Covid cases. Unrest in Sri Lanka is subdued for the moment, but the underlying reasons behind it – namely economic failure – have not gone away.

“Wherever protests take place in the world, if the issues that spark them are not resolved, they will persist,” Todorovic warns.

“Incidents of social unrest have been rising since the Global Financial Crisis of 2008,” says Srdjan Todorovic, Head of Global Political Violence and Hostile Environment Solutions at �ǿմ�ý Commercial. “We expect these to continue throughout 2023 and beyond, given the shock of the Ukraine conflict, the cost-of-living crisis, economic slowdown, and the polarized politics that have created tensions around the world. We are seeing rising interest from risk managers in specialist cover for political violence, as some traditional property and casualty insurers have stepped back from the exposures associated with strikes, riots and civil commotion (SRCC) insurance.

“The buying habits and demand remain the same for full political violence perils, but there have been significant losses in the standalone political violence and terrorism insurance market. The impact of these losses has prompted many buyers to reconsider and reassess their limits and coverage needs as a consequence of the contraction in available reinsurance/treaty capacity,” Todorovic concludes.

There are various types of insurance available to cover different political violence risk scenarios. Regardless of which type is selected, all political violence and terrorism insurance types can include the following main coverages:

Property coverage

• Physical damage/losses sustained from an insured peril

Business interruption/Contingent business interruption (CBI) coverage

• Reduction to gross/net earnings suffered due to the necessary interruption of a business’ operations; and expenses incurred in attempting to reduce loss or increase operations elsewhere. Denial of access due to civil or military authority; supply chain issues.

Standalone terrorism and sabotage insurance

• Act of terrorism: An act or series of acts, including the use of force or violence, by any person or group(s) of persons whether acting alone or on behalf of any organization(s) committed for political, religious or ideological purposes
• Sabotage: Any wilful physical damage or destruction perpetrated for political reasons by known or unknown person(s)

Standalone strikes, riots and civil commotion insurance

• Strikes: Any wilful act of any striker/locked-out worker during a strike; any act of a lawful authority to suppress or minimize the strike’s consequence
• Riots, civil commotions: Any political act committed in the course of a disturbance of the public peace by a group of persons; any act of a lawful authority’s act to suppress or minimize a riot

Political violence insurance

• Malicious damage: Physical loss/damage resulting from a malicious political act committed during a public disturbance
• Insurrection, revolution and rebellion: Deliberate, organized armed citizen/subject resistance to a sovereign government’s laws
• Coup d’état; mutiny: Sudden, violent and illegal overthrow of a sovereign government; resistance by members of legally armed or peace-keeping forces to a superior officer
• War; civil war: Conflict between two or more sovereign nations, declared or undeclared; a war carried out between or among opposing citizens of the same country or nation