Covid-19 to be a Geopolitical Game Changer in Asia, says Aon
Aon plc, a leading global professional services firm, has published its 2020 Risk Maps report, which finds that the novel coronavirus (Covid-19) pandemic will likely transform the geopolitical landscape.
Extraordinary public health measures and a precipitous drop in global trade will continue to exert significant pressure on economies and governments and will reshape long-standing geopolitical norms, Aon reports.
Aon developed the 2020 Risk Maps in partnership with The Risk Advisory Group and Continuum Economics, which examine political risk, terrorism and political violence globally. Aon's Risk Maps are designed to help firms better understand and navigate evolving exposures created by these uniquely challenging risks.
The socioeconomic implications of the Covid-19 pandemic are likely to be profound, says Aon. Countries that rely heavily on tourism or retail, or where there is a higher human toll from the pandemic, will face greater potential for civil unrest and government-focused protest -- a risk that was already elevated prior to the pandemic. Aon's report finds three in five developed economies face the potential of strikes, riots and civil unrest in 2020 -- and it seems the Covid-19 pandemic will deepen those concerns.
Rapidly Evolving Risks in Asia
In Hong Kong, political unrest has caused widespread physical damage to property and business. Most big companies typically have comprehensive coverage that includes cover for strikes, riots, and other civil commotion (SRCC). But many of these policies have specific language that excludes loss or damage due to political unrest, which is commonly referred to as the terrorism exclusion clause.
With the new Hong Kong security law potentially broadening the activities that could be considered as acts of terrorism, the scope of the terrorism exclusion clause may now extend considerably. The SRCC, therefore, has the potential to become the number one peril faced by businesses in Hong Kong, causing more of a risk than the more standard threats such as fire, flood or typhoon.
Julian Taylor, Head of Crisis Management, Asia, Aon, said: “To address these rapidly evolving risks, we are seeing businesses turn to the terrorism and political violence insurance market for tailored solutions. These standalone policies can cover not only the property damage elements of the risk but also business interruption, and not only financial loss arising from direct physical loss or damage but also as a result of contingent risks, such as denial of access or loss of attraction. Boards, CFOs and risk managers need to work closely with brokers and insurers to move forward with confidence and certainty in this volatile market."
Steve Taylor, Head of Credit Solutions, Asia, Aon, said: “Political volatility is increasing, driven by a number of themes, including the socioeconomic and political reactions to the Covid-19 pandemic. We expect political risk insurance to play an increasingly important role for investors, lenders and corporations, underpinning strategy and financing as well as mitigating currency risk, expropriation, political violence and sovereign non-payment risk.”
Please CLICK HERE to view more information about Aon's 2020 Risk Maps.