67% of UK business leaders fear the bumper election year will impact their ability to trade internationally

Almost a third (31%) of UK business leaders cited political risk as the number one threat they face this year...

• Over a quarter (27%) of UK business leaders surveyed feel unprepared to deal with the political risks they face.
• Similarly, 26% of UK business leaders reported feeling unprepared against the threat of war and terrorism.

Beazley has published its latest Risk & Resilience report: Geopolitical Risk Snapshot 2024. The report details how, in this era of accelerating geopolitical risk, businesses across the globe are navigating the political tensions caused by a bumper election year.

As elections in the UK, US and across the globe loom, a survey of over 3,500 global business leaders by Beazley revealed that 30% believe that political risk is the biggest threat they face this year, rising to 31% in the UK. In a time of heightened global tension and arguably, one of the most volatile global political landscapes in decades, the threat of political risk and violence is high on the risk radars of global business leaders with 36% of global executives believing they are operating in a high risk environment.

The research further showed that 70% of business leaders globally are concerned that the outcome of this year’s elections will impact their international operations and ability to trade.

With an expected UK general election and US presidential election taking place in the autumn, 27% of UK and 25% of US business leaders said they are unprepared for the threat of political risk and violence. The events that unfolded on Capitol Hill in January 2021 are still front of mind for many, with the presidential election in November threatening to boil over again. Alongside the US, Venezuela’s presidential elections also pose a high risk of political violence.

Alex Hill, Focus Group Leader - Political and Terrorism Claims, Beazley said: “While businesses can draw up a list of high-risk elections ahead of time, they will not know what impact an election will have from a political violence perspective until it happens. While polarisation is a good indicator of the likelihood of strikes, riots and civil commotion taking place, unpredictability is an inherent feature of political risk. This is why businesses must take precautions to protect themselves well in advance, whether those be physical measures or seeking insurance cover.”

Political instability challenges the transition

The report also examines how political risk is impacting the global energy transition, especially in Africa where regime change, conflict, and coups in recent years have hindered the continent’s electrification and extraction of critical minerals required for the renewable energy transition.

Nine coups have taken place in West Africa, Central Africa and the Sahel region since 2020, posing a challenge to foreign investors with banks and other lenders demanding political risk and trade credit insurance be in place before committing to large energy infrastructure projects. These factors combined with over 60 elections taking place this year, are reflected in the rise of business leader concern over political risk which is up to 30% this year, up from 25% in 2022.

Roddy Barnett, Head of Political Risks & Trade Credit, Beazley said: “Our research reveals that the current geopolitical environment is creating a feeling of instability for businesses of all sizes, and how specialty insurance can play a vital role in bringing some financial reassurance to them. Amid growing political tensions across the globe, standalone cover for political risk and trade credit, political violence, strikes, riots and civil commotion is increasingly important. As businesses become exposed to a growing range of perils, the need to move away from pure terrorism cover is apparent, with businesses in major Western democracies being particularly affected.”