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  • Written by Media Outreach

Global political volatility leads to heightened terrorism and political risk

 

SINGAPORE - Media OutReach - 11 April 2018 - Today, Aon (NYSE:AON) publishes its 2018 Risk Maps covering Political Risk and Terrorism and Political Violence, produced in conjunction with Continuum Economics and The Risk Advisory Group.

 

Terrorism and Political Violence: Islamic State Poses a Sustained Threat

 

Despite the absence of a spectacular attack by Islamic State (IS) in Southeast Asia in 2017, the jihadist movement and their affiliates pose a sustained threat in the region. IS has provided a unifying framework for groups in the region, binding them together into a more coherent and capable force. Singapore is seen as a prized target and IS has directed several propaganda pieces specifically aimed at the city-state in 2017.

 

The country risk level for Singapore remains "low" a year after it was raised from "negligible", and a terrorism peril is still in place--particularly from attacks mounted by lone actors using improvised weapons. Although Risk Advisory has not recorded any terrorist attacks in Singapore over the past 12 months, this peril and risk scoring reflect the arrests of purported extremists and disruption of plots in the country in recent years.

 

The Singapore Government takes the threat from terrorism seriously with the recent passing of the amendments to the Public Order Bill and the new Infrastructure Protection Act aimed to reduce the effectiveness of any potential terrorist atrocity. In the last 18 months, they have continued to prepare its population with the SG Secure app and security agencies through regular inter-agency exercises framed around a terror attack and its aftermath.

 

IS-linked attacks in the Philippines in 2017

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The threat is more severe in the Philippines where overall country score remains "high" in 2018, a year after it was raised from "medium". This comes after Islamist extremists seized control of the southern city of Marawi for five months in 2017, with the government introducing martial law. It also reflects signs of IS-linked factions regrouping in southern Philippines and jihadist capability to mount attacks from there across Southeast Asia.

 

Dan Bould, Regional Director-Crisis Management, Asia, Aon Risk Solutions commented, "In 2018 we expect a continued increase in terrorist activity within Asia. While the global reach of IS appears to have peaked, they will continue to agitate for attacks in areas where they have traction, notably in the Philippines and to a lesser degree in Malaysia, Indonesia and Singapore. Recently we have seen IS producing more directed and relevant propaganda content aimed at Asia based militants and affiliates. Their messages aim to inspire and motivate individuals to mount attacks using crude and improvised weapons. The shift in modus operandi towards lone wolf attacks utilising everyday objects highlights an evolving peril that organisations must address. The property damage sustained in such an attack is historically minor while the effect on operations and business interruption may well be substantial."

 

Globally, 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. The number of terrorist attacks in Western countries in 2017 (204) was roughly double that of 2016 (96).

 

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

 

Political Risk: The Balance of Power Shifts to Asia

 

Over the last year, Asian countries' trade linkages have been shifting away from the US and toward China. This is due to China's economic development and its rise as a trading giant. Asia's exports to the US have also edged down from around 23% of total exports in 2000 to stabilise at around 12% in recent years. By the same token, Asia's exports to China have more than doubled over the past decade to around 23% currently. The ongoing trade standoff between the United States and China, fuelling fears of a full-blown trade war, could upset the growth trajectory of Asian nations if not managed well.

 

Singapore, Malaysia and South Korea are the most highly-exposed economies with relatively more exposure to China than to the US. Net commodity exporters such as Indonesia and Malaysia face a two-fold impact from a China/US slowdown. This would come in the form of lower volume of exports to their key trading partners, as well as a potential commodity price slump following a decrease in demand from key consumers. These factors would result in an overall lower value of these countries' total global exports.

 

Given the healthy global macroeconomic environment, Asia's overall prospects are bullish in 2018 with an estimated regional export value growth of 5-10% in 2018.

 

Notes to editors

The Aon Political Risk Map captures changing risks for businesses and countries across emerging and frontier markets (non OECD countries).

For more information and to access the interactive maps and full report please visit the Aon website. 

 

About Aon

Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

 

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About Continuum

Continuum Economics (formerly Roubini Global Economics) is the international market-leading service for independent economic research powered by 4Cast and Roubini Global Economics. With its growing user base of 10,000 clients and a reputation for incisive analysis on every aspect of the market, it provides research that spans short-term market signals and long-term strategic themes. This approach uncovers opportunities and risks before they come to the attention of markets, helping our clients make more informed decisions.

 

Continuum Economics works with clients in a series of different ways, from macro strategy subscription products to bespoke work, multi-client conference calls, direct access to analysts and the licensing of its systematic country risk analysis tool. For further information on Continuum Economics, please visit www.continuumeconomics.com

 

About The Risk Advisory Group

The Aon Terrorism and Political Violence map represents detailed empirical and intelligence based assessments on terrorism threats and political violence risks.

 

The map has been produced in conjunction with The Risk Advisory Group since 2007. The Risk Advisory Group is a leading, independent global risk management consultancy that helps businesses grow whilst protecting their people, their assets and their brands. By providing facts, intelligence and analysis, The Risk Advisory Group helps its clients negotiate complex and uncertain environments to choose the right opportunities, in the right markets, with the right partners. www.riskadvisory.com

Authors: Media Outreach

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