Smarter Way to Risk: Heightened political risk landscape driving uptick in demand for "sophisticated solutions"
A series of cascading events this year – including Russia's continued war in Ukraine, the conflict between Israel and Hamas and more localised uprisings around the world – have exacerbated the volatility and uncertainty which hangs over the global economy.
The focus on political risk mitigation – in all its guises – has arguably never been more important. This is the central message in our second episode of Smarter Way to Risk, an informative series brought to you by WTW in partnership with The Insurer TV.
Jo Holliday, global head of crisis management at WTW, details the “paradigm shift” in the geopolitical landscape which global businesses are having to navigate and consider. This has prompted a growing interest in sophisticated political risk and terrorism insurance solutions.
Although it tends to be the large-scale and high-profile conflicts that come to mind when considering the drivers behind this heightened interest in political risk products, there are broader causes as well. According to Holliday, these include shifts toward authoritarianism, social media-driven riots, and rising populism.
Watch the 8-minute episode to get the latest on:
- The 2023 geopolitical climate – Holliday discusses the state of political violence and terrorism insurance in 2023, emphasising its importance for business continuity
- Predicting political risk trends – WTW’s work on predicting future risks, with a focus on potential social unrest from major elections in various countries
- Factors influencing civil unrest – Factors like energy and food price inflation, social media prevalence and dependence on energy imports contribute to political unrest, particularly in Europe and Latin America
- Concerns about SRCC exposures – Holliday addresses the proactive market approach to strike, riot and civil commotion exposures potentially hidden in property treaties
- Rate adequacy and market stability – Despite downward pressure on rates until mid-2023, recent Middle Eastern events have refocused attention on rate adequacy
- Rise in captive insurance for political risk – Not all risks can be absorbed by the private insurance market, indicating a need for broader solutions
- WTW’s commitment to meeting demand and its approach to risk management