Business resilience at inflection point warns insurer

The growing threat from geopolitical risks has left businesses across the world scrambling to rewrite their operational strategies.

Insurer Beazley said the impact was such that business strategies at point of inflection as global sanctions and commodity shortages and price hikes bite

The warning comes as the underwriter today issued its latest risk & resilience research into geopolitical risk. It concludes that events so far this year have significantly altered business leaders’ perceptions of the risks they face and their resilience to those risks, which has fallen dramatically since 2021.

The impact of inflation is also causing deep concerns about domestic stability alongside the fear that global tensions are increasing the threat from external forces. As business struggles to adjust to this new reality, preparedness and mitigation strategies are becoming a key focus.

The report, entitled Spotlight on Geopolitical Risks, found that across the UK and US, few business leaders feel well able to manage current geopolitical risks. Concerns about the possible consequences of war are spiking upwards compared with last year, and in the first year we have asked the question, inflation has become a dominant issue.

The report’s results paints what Beazley described as “a troubling picture”:

  • It is urgent that business builds its resilience as we face a high risk/low resilience geopolitical environment.
  • Inflation is a dominant threat with 55% of business leaders believing they lack the necessary resilience to deal with it, which rises to 65% in the United States.
  • The proportion of business leaders ranking war and terror as their top risk is up 46% on the previous year.
  • Economic uncertainty is up 31% on the year before.
  • Rising prices and an unpredictable economic environment are driving instability and civil unrest as we have already seen in Sri Lanka, with countries such as Egypt and Turkey possibly vulnerable too.

“US business must confront the double threat of unpredictability at home from rising gun violence, whilst as a world superpower it is facing up to a watershed in geopolitics as its relationship with Russia and China shifts,” the report warned. “Business leaders need to better understand their geopolitical risks and prepare for and seek to mitigate them where possible.

“Specialist political risk, trade credit and terrorism insurers have a role to play in providing appropriate cover that provides the risk mitigation that they need.”

Roddy Barnett, Beazley’s Head of Political Risks & Trade Credit commented: “Against a challenging backdrop, business strategies are now at a point of inflection. Even those territories far removed from the theatre of war in Eastern Europe are feeling the impact of global sanctions and commodity shortages on risks across the board from supply chain to cyber to political risk and trade credit.”

“Businesses need to know that as we face a moment of geopolitical change, which is fraught with unpredictability, they can protect overseas physical assets and their human capital both at home and abroad, by actively investing in a mixture of risk management and effective insurance cover.”

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