Global Conflicts, Local Risks

In the 2026 report, war overtook civil unrest as the No. 1 political risk and violence exposure of concern for companies globally. Given that the survey was conducted before the U.S.-Israeli war with Iran, and as the Ukraine war was entering its fifth year, what pushed war to the top of that list?

Many people remember the Ukraine war, remember the Middle East. But people often forget that 2025 was a really big conflict year with lots of cross-border conflicts. I suppose everybody remembers Israel-Iran [the Twelve-Day War], where also the U.S. was involved directly. That’s certainly one in the middle of 2025, before this survey was taken, that was in focus; and that actually moved a lot of the red lines that we’re now seeing being almost accepted in the Middle East, the U.S. and Israel bombing Iran.

But beyond that, we had Pakistan and India conflict, we had Rwanda and the Democratic Republic of Congo. We had border disputes with Thailand and Cambodia, which still kind of continue even though there is sort of a loose peace deal and ceasefire. Armenia, Azerbaijan signed a peace deal after having a little bit of conflict. Egypt-Ethiopia, there were some issues around water and damming and border disputes. Serbia and Kosovo. And that’s not even looking at what’s happening in Mozambique and in the Saharan region of Africa.

Ukraine was still in the headlines. Israel and Iran was the one that really was covered broadly. But if you scratch that surface, if you take away the big events, you still had sizeable potential incidents. So that’s why I would say it went up the rankings. It affects not just the political violence line of business, but it also affects marine and aviation, all policies which cover an element of war in their insurance coverages.

For companies in the Americas, war fell to the bottom of the five listed exposures of concern. Why is that?

In the Americas, but particularly in Central and South America, riot, civil commotion, or civil unrest is the big topic because it’s the one that affects most of the countries in the region, one way or another. And the other topic in that region is organized crime, cartels and that general genre of political violence. So I would say probably because it’s the most visible form of violence and risk that they see in that region.

If you saw what happened in Venezuela, [the capture and extraction of then-President Nicolás Maduro] that was obviously in ’26, a relatively successful operation by the U.S., but you have now protests and riots that are not covered a lot in Venezuela.

There might be an element where war starts to climb back up the rankings when we do the [next] survey towards the end of the year, especially with what’s going on in the Middle East, how that’s affected oil and gas supplies into the region, etc.

So the dynamic of it changes. But certain regions have more elevated perils in the political violence offering. In South and Central America in particular it’s SRCC [strikes, riots, and civil commotion]. If I focus on North America, if I look at the U.S., for example, 2025 saw a big political movement mobilizing on the streets. Now, that didn’t often lead to physical damage and violence, but the size of the movement, the “No Kings” days that were held across cities that mobilized millions of people, is potentially a flashpoint in the future. If you look even further into the U.S., the ICE raids that have been going on since mid-last year are another potential flashpoint.

So that’s probably why people feel more removed from the political violence of war and feel closer to the reality which is on their streets, which is civil unrest and maybe elements of terrorism as well and organized crime.

If you look at the larger businesses that might be more regional but not global, so being focused in Latin America, they would have that concern and they would have multiple countries with the same sort of dynamic—maybe corruption, a little bit of organized crime, running side by side with governmental crackdowns. I think that’s probably why that concern is very localized for those people because they see it. They also have an element of resource localization in the sense that they have oil and gas in the region, there are producers, so these bigger events across the globe maybe have a lower impact directly on them.

In terms of smaller businesses in the region, they are probably less concerned or they see less impact from these bigger events around the world. Like the oil and gas supply, I talk about a lot because it’s going to be something that we’re going to be talking about for the next few years. They are probably more concerned about people on the streets or people just in the vicinity having money and the ability to spend on food, beverages, going out to restaurants. Even just the level of unemployment and employment in certain countries will impact this.

Those midcorp entities and SMEs [small and midsize enterprises] also do not have a risk management function, or they have a very small function, whereas large corporations will have a risk manager, they will have probably a risk management team, they will have external consultants helping them understand their exposure. I think the SME or midcorp space does not have the resources to look beyond their immediate problems and troubles. So that’s probably why they’re not concerned about the war element across the world. But that doesn’t mean it won’t change if war comes closer to their doorstep.

For those small and midsize businesses, is there a sense from their responses that they feel their size leaves them more vulnerable to localized events?

I would 100% say yes. They have a localized footprint so they are concerned with a few of their sites in the country. I think not having the resource to be able to foresee what impact an oil blockade in the Strait of Hormuz will have on you is the right thing. Also, a lot of these SMEs and midcorps, they can’t be planning two or three years ahead because they are living at such small margins. They have to be thinking about what can they do now for the near future. Whereas the large corporates can look five, 10 years ahead and plan and buy oil and gas in the futures market. They can do this sort of stuff because they have deeper pockets, they have the ability to envisage this, and they have a bigger footprint that’s impacted by this.

How can smaller companies be thinking about and be planning their risk management given their relatively limited resources?

Well, you can hire experts. Insurance, that’s certainly one, that’s a backstop. Ultimately, it does require prioritization, understanding your risk. If you can’t get your nuts and bolts from Guatemala and you have to source it from elsewhere, what impact does it have? You need to understand who your customers are and your suppliers. It’s important for big companies, but they have the money to find resources, whereas these midcorp ones don’t.

So just really understanding where your bottlenecks and your pinch points are. Is it a specific risk at your site, or is it a specific risk at the point of accessing your service or your goods? That can be done in-house, that just needs a group of people talking about the risk of SRCC, of terrorism or war, potentially, for their own entity. That’s certainly something that Allianz would encourage them to do.

Of course, brokers in the insurance world have these facilities as part of their insurance offering to facilitate this kind of risk assessment. That does not need to be expensive throughout the whole year. It could be a snapshot at a particular time. That would be something that I think those midcrop and SMEs could be doing.

Large companies listed civil unrest at No. 4 on the list of political risk and violence concerns, while other businesses ranked that threat at or near the top of their lists. Do greater resources or larger operations allow those big companies to worry less about civil unrest, or is there more to it?

Multiple reasons. I would firstly say larger footprint, so they have to have a more generic approach to their risk management. They probably can’t focus on any one site in particular, they have to look at it more generically. And they have to look at the worst case for them. If they are a large group and they have a lot of risk management funds and the ability to absorb some of the risk, they are probably not concerned with small fire risks, small flood risks, small riot risk, etc., on their assets. They’re more concerned with those big shocks that are going to raise their price overnight or going to remove some of their customer base at a click of a finger. A change of sanctions regime in a particular country, if that’s the country that you’re trading with, that’s going to be impacting your future sales. So that’s certainly one.

So it’s the footprint, which they have to approach with slightly more of a high-level view. Again, deeper pockets and maybe better understanding of risk. So they may have gone through these scenarios where SRCC is not a problem for a manufacturing site that does chemical manufacturing of some sort or plastics or manufactures kettles. But if you are a retailer and that’s your big go-to place on the high streets, in the shopping malls, at airports, then SRCC may be your biggest topic and not so much war because obviously of the locality. So it’s the size really that protects you.

We’ve focused on one slice of the report. Are there other sections that you would encourage risk managers or companies to pay particular attention to?

Well, certainly war, that’s the main topic of the report.

I would say for me, being in Western Europe and looking at the trend of warnings coming from some of these security agencies, but also just seeing it from the news, the sabotage element. So the gray zone attacks. You could always call it hybrid conflict or hybrid warfare. I think this is very important.

Let me give you some examples. Cyber is clearly one way that this hybrid conflict can escalate, sabotage can escalate. You can have the physical security, as in physical assets that are targeted, so you would need to concentrate on physical security of sites. You may have people radicalized within an organization, so you have problems within larger corporations that could sabotage from within some operations and have an impact on that. And ultimately also organized crime, which is used often to conduct malicious acts on behalf of potentially state actors or parties of interest that want to impact certain industries.

I’ve said it before, the cat is out of the bag. Regardless if there is a signed, formalized peace deal in Ukraine and the Middle East, the states are not going to stop the gray zone attacks. It’s in their interest to keep organizations in the U.K. and Europe spending millions on security and having to put extra effort into cyber, extra effort into offshore securities. The cost associated with keeping all of this in check is vast. And in a world where resources are stretched, financial resources in government are stretched, it’s a really inexpensive way of, unfortunately, keeping a lot of people on their toes. It’s a risk that’s here to stay.

I think particularly industries in critical infrastructure, so communications, oil and gas, energy, transportation, I think those are the ones that are really going to be the focus of it. But equally, as we’ve seen in Poland and a few other places, some of these softer occupancies like retail, they’re going to also be suffering from this type of incident.

In this environment, are there takeaways from the report for brokers that specialize in political violence and terrorism insurance about how they might need to update their thinking for how they serve their clients?

For me, if I was a risk manager, I would focus more on the right coverage compared to the limit that you can obtain. Because if you’re buying the wrong product, it’s irrelevant that you’ve been able to obtain a billion limit or $2 billion or $500 billion. If that does not respond to your actual true risk, it’s not worth the paper it’s written on. So it’s very important that the funds that you have for insurance purchasing are buying the right product.

This is so obvious to say, but I see time and time again, even in the Middle East now, people are asking for terrorism coverage. OK, there is terrorism exposure in the Middle East, but the biggest exposure in the Middle East now is war. So, you spending money on terrorism [coverage] is fine, of course, but it does not cover you against war. And if you are concerned about it, please buy war coverage. Buy less limit, but buy the right cover. It’s really very important to understand that.

The other part of it is prioritize, because it’s not a blank check for these companies for insurance and insurance products. So spend a little bit of money, or time if you don’t have the money, understanding what your true risks are. Is it a particular client, is it a particular customer, is it a particular site that’s very important for your production or for your distribution or for your cybersecurity? Amend your product and your limits and your deductibles based on this exposure.

Let’s give an example. Let’s say you are a retailer, you’re selling expensive clothing. Of course, your big sites, as in your retail sites, are important. But imagine that your key warehouse in a particular country gets attacked and gets looted. Then none of those stores will be able to get the supply of the product that you have at that warehouse. So you might not think your warehouse is your critical point, but actually losing one shop is not an issue, losing that warehouse is the issue. So you have to think about this element of it.

Right limits and coverage are important, but particularly the coverage. But also stepping back and assessing your risks. Even if you spend an afternoon with your risk team, this is so important because that will educate and inform the conversations you have with your broker. And also you will have a little bit more focus from underwriters to say, “OK, so this is your critical site. We don’t think this is a big terrorist [exposure] and don’t think this is a riot risk. We think this is more of a war risk, buy war coverage.” So there’s an element of that discussion. If you’re coming in with understanding of your risk, you will get the right product. And I think that’s the key.