Management Consulting

In Hong Kong, businesses have faced significant challenges due to political unrest, which has led to widespread physical damage to property and operations. Many companies typically have comprehensive insurance coverage that includes protection against strikes, riots, and civil commotion (SRCC). However, these policies often contain specific exclusions for losses related to political unrest, commonly referred to as the terrorism exclusion clause. With the introduction of the new Hong Kong security law, the scope of this exclusion may have broadened, making the SRCC a critical risk for businesses, potentially surpassing traditional threats like fire or natural disasters. To address these evolving risks, Aon has observed a shift among businesses towards the terrorism and political violence insurance market for tailored solutions. These standalone policies not only cover property damage but also include business interruption losses, which can arise from contingent risks such as denial of access or loss of attraction. This approach allows companies to navigate the volatile market with greater confidence. Aon emphasizes the importance of collaboration between boards, CFOs, risk managers, brokers, and insurers to effectively manage these risks. The report highlights that political volatility is on the rise, driven by socioeconomic and political reactions to the COVID-19 pandemic. Aon anticipates that political risk insurance will become increasingly vital for investors, lenders, and corporations, as it helps mitigate risks associated with currency fluctuations, expropriation, political violence, and sovereign non-payment. The findings indicate that civil unrest, terrorism, and political violence are becoming more prevalent, particularly in traditionally stable economies, necessitating a proactive approach to risk management.