File photo in July 2021 of a clean up by the community in the Nandi Drive area, near Mass Discounters warehouse, after the looting that plagued Durban, KwaZulu-Natal.Picture: Shelley Kjonstad/African News Agency(ANA)
Anger over growing the cost of living, foundering faith in governments and institutions and, instability in politics are some of the main factors expected to fuel ongoing incidences of strikes in South Africa, according to the Allianz Risk Barometer 2022.
According to the report from from insurer Allianz Global Corporate & Specialty (AGCS), which looks at the top ten risks countries faces, political risks and violence remains the fourth biggest risk in South Africa.
The top 10 risks in South Africa were:
"In Africa and the Middle East, political risks and violence fell two places to sixth, but it is still in the top three risks in Burundi, Madagascar, and Nigeria. It remains fourth in South Africa and eighth in Cameroon, the report said.
The report released yesterday, titled Strikes, riots and civil commotion – a test of business resilience, aims to explore how, in an unstable world, how and why are tensions likely to flare up and what does this mean for business?
The report found that businesses, at large, needed to be vigilant of a heightened risk of civil commotion, as it could often lead to material damage to property or significant disruptions to operations.
AGCS Regional Practice Group Leader Etienne Cheret said countries with a high level of polarised politics, such as South Africa, were perceived by many to carry a higher risk of unrest.
“Where protests are particularly disruptive, there is also the danger of counter-movements in retaliation, which can escalate conflict,” he said.
The reports said the outcome of the corruption trial of former president Jacob Zuma in South Africa could be a flashpoint.
“Specific incidences of civil unrest can be difficult to predict because they often start with a specific trigger, such as a change in government, a piece of new legislation or a sudden price rise.”
The report said civil unrest risks rose in over 50% of countries between the second and third quarters of 2022. According to the Verisk Maplecroft Civil Unrest Index, out of 198 countries, 101 saw an increase in risk, compared to 42, where risk decreased.
"This follows a trend of increasing instability since the Global Financial Crisis some 15 years ago. Violent demonstrations have recorded the largest deterioration of all indicators, worsening by nearly 50% since 2008," it said.
The report found that reported damages from just six civil unrest events around the world between 2018 and 2023 resulted in at least $12 billion (R218.6bn) in economic/insured losses. Insurance claims from South African riots in July 2021 cost $1.9bn.
AGCS head of political violence and hostile environment solutions Srdjan Todorovic said incidences of strikes, riots, and civil commotion (SRCC) had not only increased in recent years, but they are also becoming more intense and catastrophic. These types of events are making this era one of uncertainty.
“We have seen multibillion-dollar loss events in the US, Chile, and Colombia. The threat is changing, and although many of the reasons for it are universal – whether economic, political, or environmental – it can play out differently in different regions, with various levels of violence and disruption.
The report said businesses need to remain vigilant about the different types of threats that SRCC poses to their activities.
According to the report, since 2017, more than 400 significant anti-government protests have erupted worldwide.
The report said while the Ukraine war is a major factor in this ranking, the results also show that the impact of strikes, riots, and civil commotion (SRCC) activity ranks as a political violence risk of top concern with a combined score of almost 70%.
In the report, AGCS’ political violence team highlights the five main factors they expect to power further SRCC activity in 2023 and beyond:
The ongoing cost-of-living crisis: Although inflation is now thought to have peaked in many countries, the after-effects continue to take their toll.
Distrust of governments and institutions: Governments thought to be corrupt or perceived to have been in power for too long can bring people out onto the streets.
Increasing polarisation: Political divisions are stoking tensions around the world, undermining social cohesion and escalating conflict.
A rise in activism: In recent years, movements that have been significantly galvanised by social media include the global Occupy movement against economic inequality, the Black Lives Matter protests highlighting racial inequality, the #MeToo movement against sexual abuse and harassment, and the Stop the Steal campaign, which falsely claimed electoral fraud in the election of US President Joe Biden.
Climate and environmental concerns: Where governments are seen to row back on climate-change progress, such as fracking or reopening coal mines as a solution to reliance on Russian gas, there could be unrest.
The reports said businesses needed to protect their people and property in times of upheaval with forward planning, swift action, and the right insurance cover.
BUSINESS REPORT