While businesses are increasingly concerned about the threat of political violence is increasing, only 37% of those surveyed for a new Lloyd’s of London study believe they have a solid understanding of the risks their companies face.
What’s more, 22% of those surveyed said they don’t systematically assess the political violence risks their companies face. And 23% of respondents said their companies have no business continuity plan, while 14% said their existing plan has not been updated, despite the need to do so in the face of growing political violence exposures.
Lloyd’s conducted its study, Under attack? Global business and the threat of political violence, in conjunction with the Economist Intelligence Unit, surveying 154 executives from companies of various sizes and industries from around the world, then following up the survey with interviews of senior executives, terrorism experts and others.
The survey found that 37% of those companies polled had made decisions to avoid investments in some overseas markets as a result of political violence, while 23% of those surveyed said they have increased insurance levels and/or spending over the past five years in response to the threat. And 20% said the possibility of political violence led them to “not pursue an otherwise promising business activity.”
Lloyd’s said its survey showed companies particularly focused on four key emerging threats: supply chain risk is an increasingly important consideration for companies; the risk of IT systems becoming the target of cyberterrorism has led 40% of those surveyed to increase spending on IT security; “home-grown” terrorism has forced companies to tighten their procedures in such areas as employee vetting, choosing sub-contractors and selecting locations for operations; and an increased recognition of chemical, biological, nuclear and radioactive attack risk is leading companies to develop and test continuity plans for addressing CBNR exposures.
As companies look to address the political violence risks they might face, Lloyd’s says they aren’t always investing their time and resources appropriately. “The main reason seems to be that they are not doing enough to analyze and understand the real risks against their business,” the report said.
Most companies, 65%, rely on international news media as their source for information on political risks, Lloyd’s said, a “sensible start,” though “too few go any further,” with only 43% looking to local media in troubled areas for information and only 49% taking advantage of business-to-business information sharing and forums.
“Most worrying,” the report states, “only 39% have a mechanism for employees to feed information they have learned into political risk analysis, yet someone working long term in a strife-torn country will often have a better sense of changing risks than international reporters who jet in and out.”