Foreword from the Chairman of Lloyd’s
Geopolitical risk in its various forms affects most of us, but its impact on business is not often recognised or well understood.
One estimate suggests the costs of political risk to the global economy could be $1 trillion, equivalent to a 0.25 percent 'geopolitical tax' on global GDP growth.
21st Century terrorism is a specific issue where the price of getting it wrong can be very high, and the solutions are rarely simple. In the last decade, in addition to those who perished after 9/11, nearly 2,000 people have died in terrorist attacks on business alone, and around 20% of terrorist attacks are aimed at the business community.
The 2007 research shows that boards are spending an increasing amount of time discussing terrorism and political violence risks. However, there appears to be a significant gap between a growing risk awareness and tangible action actually taken by many companies, driven by a lack of understanding of the dynamics they encounter as they globalise.
This is coupled with a lack of awareness about the impact the organisation has on the environment in which it operates. Typically, business sees itself neither as part of the problem nor part of the solution in regions of conflict and instability. More active engagement can deliver real benefits to organisations – which go beyond strong risk management alone.
For those of us operating in an increasingly complex risk environment, political violence may not always be top of mind. But, in an era of increased globalisation, understanding and preparing for political violence has arguably never been more important for business. More than one of the organisations interviewed for this study has seen colleagues killed in politically motivated attacks.
Lord Levene
Chairman of Lloyd’s
April 2007
