Anyone in the business of risk management will tell you it's impossible to be 100% prepared. Risks are constantly evolving in new and unpredictable ways. As risk managers consider how best to mitigate and insure risks, it is important to understand where they are exposed and to what.
The 2018 issue of Aon Risk Solution's Terrorism and Political Violence Risk Map does just that, highlighting many of the complexities faced around the globe. The risks analyzed — terrorism, political violence and political risk — are fluid and ever-changing. Drawn on insights from their partners, The Risk Advisory Group and Continuum Economics, the maps and their underlying analysis address some of the most pressing issues in the crisis management space.
2018 is far from over, and neither are the risks. Being as prepared as possible can make all the difference. With this in mind, here are some key takeaways from the 2018 Risk Maps.
Related: NU's Risk manager choice awards: Who's talking?
|Tourism takes a hit
The tourism industry is highly sensitive to terrorism risk. A major attack can have an immediate impact on travel patterns, and attacks that do not directly target the industry can also have a substantial indirect impact on tourism revenue.
Just last year, Las Vegas experienced one of the worst mass shootings in modern U.S. history; cancellations at a number of Las Vegas properties surged soon afterward. Insurance executives predicted the insurance industry would have to pay more than $1 billion as a result.
Of the 44 global attacks to occur in 2017, 20 took place in hotels, according to The Risk Advisory Group. Risk Advisory and Aon TerrorismTracker data indicates that more than 80% of all terrorism-related fatalities in Western countries last year occurred in locations where tourists are likely to gather — including hotels, airport, public spaces and entertainment venues.
Related: How businesses can prepare for active shooters
|Grounded
It's not great to time to be in aviation. Aon reports that companies are finding themselves with increasing exposures to airline failure and state intervention, especially as calls for more fuel-efficient aircraft rise.
In the past, aviation leasing typically focused on European and North American airlines, with the predominant exposure being to insolvency risks; the expansion of fleets into other parts of the world — Africa and Asia, in particular — has added an increasingly political dimension to lessors' and financiers' risk exposures as political risk and intervention is higher in these regions.
Related: Southwest jet engine blows out in flight, killing one passenger
|Other key figures
- Overall political violence risk levels worldwide increased for the third year in a row, with 17 countries receiving increased risk ratings and only six receiving reduced risk ratings.
- Forty percent of countries are assessed as being exposed to terrorism and sabotage risks.
- Eight percent of all terrorist incidents in 2018 targeted businesses. Roughly 75% of these targeted oil and gas, mining, transport, construction, and critical infrastructure. The rest were directed at retail, media, finance and tourism.
Working in risk management requires constant vigilance, and Aon's latest report can help insurance professionals in a number of fields. As risks around the globe rise, insurance professionals need to stay ahead of the curve and avoid playing catch up.
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Denny Jacob
Denny Jacob is an associate editor for NU PropertyCasualty360. Contact him at [email protected].
