Increasing political violence and regime instability risks in 2013: Marsh and Maplecroft

Escalating political violence is likely to continue throughout 2013, according to the Political Risk Map 2013, released jointly by Marsh and Maplecroft.

The number of countries experiencing escalating political violence has increased by 36% in the last 12 months. According to the map, 38 out of the 197 countries analysed are currently experiencing escalating political violence, up from 28 in 2012.

The report attributes much of this rise to the ‘spillover effects’ from political violence and terrorism spreading from Libya and Syria into Mali, Lebanon, Algeria, and elsewhere in Western and Northern Africa and the Middle East.

Foreign investors are warned they face an intensifying risk of expropriation in countries across the Middle East and North Africa where ruling powers might seek to use expropriation to pacify any societal discontent that may threaten regime change.

The Map names Guinea Bissau, Zimbabwe, Syria, Madagascar, South Sudan, Pakistan, Yemen, Mali, Bangladesh, Kenya and Turkmenistan as some of the countries most at risk of social upheaval forcing regime change.

“Companies with direct foreign investments are operating in a fast changing, volatile environment that has capacity to deliver pivotal game-changing instability with negative financial consequences,” said Alyson Warhurst, CEO of Maplecroft.

“The recent Algerian terrorist siege, ongoing European debt crisis, Argentine and Bolivian expropriations of energy assets, the raging civil war in Syria, attacks on the US embassy in Egypt and its consulate in Libya, and reverberations stemming from momentous leadership changes in China, illustrate the dynamic nature of today’s global political risk landscape.”

“Given this highly volatile environment, it is imperative that direct foreign investors stay abreast of the key issues impacting these regions and have plans in place to protect their strategic interests from the threats of unforeseen political changes and violence,” said Evan Freely, Global Leader of Marsh’s Political Risk and Trade Credit Practice.

“More companies are turning to political risk insurance to help safeguard their vital ownership interests, assets, supply chains, and income streams in these high potential growth, but higher risk markets.”