<!-- wp:paragraph --><p><strong><a href="https://www.allianz.com/en.html" target="_blank" aria-label="undefined (opens in a new tab)" rel="noreferrer noopener">Allianz Global Corporate &amp; Specialty (AGCS) </a></strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Businesses in South Africa experienced major losses in July from physical damage, business interruption, and loss of revenue, looting, vandalism caused by civil commotion, protests and riots which resulted in about $3.4 billion in lost output and placed 150,000 jobs at risk. </p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Political risks and violence ranked as a number five business risk in South Africa as a new entrant in the&nbsp;<a href="https://u7061146.ct.sendgrid.net/ls/click?upn=4tNED-2FM8iDZJQyQ53jATUfUaq6rdEewg0-2FUNex2Nt8Y4uD4Zn5tP73mMFbCDQUbud6zJRQ5-2BK3oOHx-2FjPXOYghQ35CLJbCxhRV8vKL7fTrZS3cQtCkpzHnGjpS0uNLQtDLln_2RsXk5eDddTgQ-2B1Y4XJdwtNoyrvPyABCdwSk5cdEpTjmzUNW-2BxanZD657HiWq7v7kb0GvLBRhCKOe57qt9nXqZq9Xh02yoZ1BzHW5Fbt-2BR7g-2Ftp-2BJb7VXZ9jJMJZaYV2dVaotxhrYrCFLBCGik0aAh0VXONFiNv1zKtA6PLMKmC14QD4uwySWZBJ9PET7AUlp-2BTiF7Z-2FO6-2FZmB1957ktYsJ9efsyz8cIqSAM1N-2BOufpnbrDMuN16c2bP-2FgN0qrJYSG6mUSHXvcNjNQt3tTX7HHIbDmRhPdhBSTNYj3PvtUtxWYXI2y-2Fu7d-2FR6B4K0X1z8SCsxTwnSLqihSKBs1Jrzgnud9khF0eL0BPxOqyAdLw-3D" target="_blank" rel="noreferrer noopener"><u>Allianz Risk Barometer 2021</u></a>&nbsp;demonstrating the significant risk for companies in the current environment. Political risks and violence also ranked as a top 10&nbsp;risk in Africa and the Middle East (#6), Ivory Coast (#1), Nigeria (#5) and Ghana (#8)&nbsp;in the Allianz Risk Barometer 2021. The survey has been running for the past 10 years globally and six years in South Africa.&nbsp; Globally, political risks and violence returned to the top 10 risks for the first time since 2018. </p><!-- /wp:paragraph --><!-- wp:image {"id":147297,"width":847,"height":1024,"sizeSlug":"large","linkDestination":"none"} --><figure class="wp-block-image size-large is-resized"><img src="https://cover.co.za/wp-content/uploads/2021/10/Africa-Middle-East-847x1024.jpg" alt="" class="wp-image-147297" width="847" height="1024"/></figure><!-- /wp:image --><!-- wp:heading {"level":3} --><h3>Allianz Global Corporate &amp; Specialty (AGCS) has prepared a Q&amp;A to guide businesses on this topic</h3><!-- /wp:heading --><!-- wp:paragraph --><p><strong>Do businesses have to be direct victims of civil unrest to suffer financial losses?</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Businesses do not have to be direct victims of civil unrest to suffer financial losses. Revenues can suffer if the surrounding area is cordoned off for a prolonged time or while infrastructure is repaired to allow reentry of customers, vendors and suppliers.&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>What can businesses do to prepare for political violence?</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Preparation is key – in particular for exposed sectors such as retail. Businesses need to review their business continuity plans (BCP) and should be aware of their surroundings and what is happening around them. Typically, these only focus on national catastrophes, but there is a need for BCP plans to address political disturbances and other types of business disruption like cyber. Having defined, and preferably tested, procedures in place is crucial – these should include staff, client and general communication and social media plans. It is imperative for companies operating in countries that have a high risk of political or social upheaval to think deeply about how they can best protect their assets and people.&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>Who are the key stakeholders that businesses could work with before, during and after political violence?</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Businesses will need to work very closely with crisis management experts from government, insurance and civil society to ensure that they have highly comprehensive and agile strategies. The experts need to enable clients to carry out evacuations in high-risk situations at short notice and provide prevention, risk mitigation and on-the-ground response services for emergency incidents. In evacuation cases, it's a question of providing the resources and staff for rapid evacuation from politically unstable areas.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>What can businesses do in terms of Strike Riot and Civil Commotion (SRCC) insurance?</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Companies should review their insurance policies. In South Africa, the South African Special Risk Insurance Association (Sasria) provides cover for damage to property caused by special risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorders. Looting is not a stand-alone Sasria peril and will only be considered as a valid claim in terms of Sasria if it occurs during an active Sasria peril for which Sasria accepts liability. Commercial and personal insurance policies in South Africa do not provide cover for damage to assets as a result of these types of events as insurers are precluded from underwriting these risks. Sasria insurance is available for material damage, business interruption, money, goods in transit, motor and construction risk. For commercial clients, Sasria cover in terms of business interruption is limited to fixed expenses or standing charges and net profit, but not for the traditional contingent business interruption covers such as losses following damage to premises of customers and suppliers, and to the supply of public utilities like water and electricity.&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>What’s the implication for multinationals operating in South Africa?&nbsp;</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Sasria’s loss limit is R1.5 billion. The Sasria loss limit is split into two, primary layer R500 million and excess of loss cover R1billion. For large corporates and multinational organizations with global insurance programs, these limits may however be insufficient and may require additional cover in the form of a ‘riot wrap’ policy. The riot wrap cover also provides cover for exclusions of war and civil war, which are not covered under Sasria. Essentially, where combined material damages and business interruption values exceed Sasria’s R500 million limit, the riot wrap policy will provide extended coverage in respect of the claim once the underlying Sasria (or primary limit) is eroded.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>What about political violence coverage in other countries?</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Covers differ from country to country. Covers can be purchased from the insurance market to ensure that your business is comprehensively covered. Insurance companies have offered SRCC cover, either as part of property insurance or a stand-alone cover via the specialty political violence market, for a long time.&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>What does political violence insurance cover?</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Political violence insurance<strong>&nbsp;</strong>provides coverage for terrorist acts, acts of sabotage, riots, strikes, civil commotion, malicious damage, insurrection, revolution, rebellion, coup d’état, war, civil war or counter-insurgency. Covers vary by line of business or country, but business insurance covers damage to property and contents when the cause is fire, looting or vandalism caused by civil commotion, protests and riots. Additionally, common extensions include denial of access (businesses shuttered because authorities have closed the area, whether damaged or not), loss of attraction (being closed, businesses cannot attract customers), and other civil disturbances.&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>What’s the importance of understanding local laws when it comes to risk management?</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>It is critical for risk managers of multinational organizations to understand the local laws and regulations of the country when it comes to managing risk.&nbsp; They carry a significant responsibility to safeguard the business operations across multiple jurisdictions and falling foul of any compliance or local regulations could incur significant penalties and fines, notwithstanding reputational damage.&nbsp; It’s here where the tripartite alliance between the risk manager, insurer and broker becomes pivotal in ensuring that there are no gaps or inconsistencies in insurance coverage, and where having risk partners with global presence and local market expertise becomes crucial.&nbsp; On managing multinational programs, we look at a four C’s approach’ – managing costs, control and compliance, and ensuring coverage is correctly scoped and consistent across all operations.&nbsp;&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>Quick planning tips</strong></p><!-- /wp:paragraph --><!-- wp:list --><ul><li>Maintain ongoing close communications with local, provincial and national law enforcement agencies&nbsp;</li><li>Coordinate response plans across functional disciplines (police, fire, medical, and private sector)</li><li>If time permits, install coverings over windows, doors, or other potentially vulnerable entry points (plywood or other suitable material) and place physical barriers to limit access</li><li>Close business before high risk times (evenings/night hours, scheduled protests, etc.)</li><li>Consider adding additional security staff</li><li>Remove exterior materials that can be burned, thrown or otherwise used to damage people or property.</li><li>Ensure exterior lighting is turned on to increase visibility.</li><li>Remove/secure high value inventory (Electronics, medicine, cash, securities).</li><li>Consider how quickly staff can recover and get back to work following an incident</li><li>Investigate if your company is over-reliant on a particular supplier or customer; avoid aggregation of suppliers</li><li>Think about supply chain vulnerabilities and the possible impact of political violence on them and create a contingency plan; this can create a contingent BI (CBI) scenario</li><li>Combine physical damage (PD) BI all-risks product with terrorism to minimize coverage gaps</li></ul><!-- /wp:list -->