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Global volatility leading to heightened political violence, risk: Aon

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Global volatility leading to heightened political violence, risk: Aon

Political violence risks are rising globally, and the likelihood of interstate conflict — even involving major world powers — is at the highest point since the end of the Cold War, Aon P.L.C. said Tuesday in its 2018 Risk Maps report.

The annual report, which covers political risk, terrorism and political violence, found that for the third successive year, more country risk ratings have increased than decreased.

The study, produced with London-based firms Continuum Economics and the Risk Advisory Group, said political violence risks are increasing due to geopolitical tensions, a weakening of liberal democratic governance, and the widespread effects of chronic conflicts around the globe.

Forty-six countries or territories are now rated as high or severe risk, representing 22% of the global total. In addition, 40% of countries are listed as being exposed to terrorism and sabotage risk, 60% to civil unrest risk, and 33% to insurrection, war or coup risk.

The number of terrorist attacks in Western countries totaled 204 in 2017, roughly double that 96 in 2016, but the total number of casualties in both years was broadly the same.

Growing geopolitical competition and weak leadership in international diplomacy have contributed to sustained or increased risks of armed conflict over the past year, according to the report.

Growing rates of polarization over political, economic and social issues in mature democracies, and divisions between Western powers in the face of complex threats and risks, have also contributed to worsening global security and greater strategic uncertainty, the report says.

The threat posed by Islamic State has stopped spreading, Aon said, but has not yet receded. IS mounted terrorist attacks in 29 countries on five continents in 2017, the same number of countries as in 2016 and up from 19 countries in 2015, but the global reach of IS appears to have peaked, and it seems likely that the number of countries where it is able to mount attacks, or inspire others to do so, will fall in 2018, according to the report.

Aon said the tourism sector is having to manage the risks posed by increased terrorism, with the sector becoming a highly attractive target for some terrorist organizations. In 2017, there were at least 35 attacks worldwide that directly targeted commercial sectors that are critical components of the tourism industry, such as hotels and resorts, nightclubs, civil aviation and visitor attractions.

Aon said the balance of power is shifting in Asia. Over the past year, Asian countries’ trade linkages have been shifting away from the United States and toward China, due to China’s economic development, and its rise as a trade giant.

Asia’s exports to the U.S. have edged down from around 23% of total exports in 2000 to stabilize at around 12% in recent years. Meanwhile Asia’s exports to China have more than doubled over the past decade to around 23% currently, according to the report.

 

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