RISKS [ THREATS ][ OPPORTUNITIES ][ MANAGEMENT ]
IN ASSOCIATION WITH
Terrorism
Civil unrest Credit risk
Oman
UAE
Yemen
Qatar
Kuwait
Iraq
Saudi Arabia
Syria
Jordan
Lebanon
20 Libya
40
20 Egypt
60
40
Algeria
80
60
Tunisia
100
80
Morocco
Canada, May 2011
Iceland, May 2011
The French financial market authority (AMF) fined seven individuals C$2.8m (€2.1m). At the heart of the affair were Serge Ollu and Guy Drouin of Ressources minières Andréane. The fines were particularly complex, with seven individuals and three companies being charged.
100
0
NATURAL CATASTROPHES
0 Index of unrest (100=most unstable) Source: Economist Intelligence Unit, all figures 2010
Incidents reported for Somalia
Current vessels held by Somali pirates
Total incidents: 178 Total hijackings:22 Total hostages: 362 Total killed: 7
Vessels: 18 Hostages: 355
StrategicRISK [ RISK ATLAS ] www.strategic-risk.eu
Belarus, August 2011
Russia, January 2011
President Alexander Lukashenko has been in power in Belarus since July 1994 and he is o#en cited in the media as Europe’s last dictator. The Lukashenko administration receives widespread criticism for the aggressive repression of dissent. As a result, sanctions were imposed on Belarusian state-owned companies and on individual members of the government.
A bomb in Moscow’s Domodedovo international airport killed at least 35 people and injured more than 100. The attack severely damaged Russia’s busiest airport. State TV said the attack had all the hallmarks of militants from the North Caucasus region.
Harrow
Camden
Haringeyy
Brent
City of Westminster Kensington & Chelsea Hillingdon Hammersmith & Fulham
Barking & Newham Dagenham Tower Hamlets 10km 20km
Ealing
CYBER CRIME
CIVIL UNREST
United Kingdom, June 2011
United Kingdom, August 2011
The hacker group Anonymous posted fake stories on the websites of British newspapers The Sun and The Times. The hacking group planted an article recounting the death of media mogul Rupert Murdoch. Anonymous announced the news of the article by posting a link on its Twitter feed.
A peaceful protest in Tottenham, North London, against the death of Mark Duggan, who was shot by police on 5 August, escalated into violent street battles across the city. Looting and rioting eventually spread through various cities in the UK. Reasons for the violence included a hot summer, austerity measures, unemployment, social inequality and the perception of bleak prospects in the future.
CORRUPTION AND BRIBERY
NATURAL CATASTROPHES
Bexley Lewisham
Merton Kingston Upon Thames
Bromley Sutton
United Kingdom, July 2011
East Africa, July 2011
Willis was fined almost £7m by the Financial Services Authority for failing to prevent bribery when making payments to overseas third parties. New bribery regulations require companies to actively avoid corruption.
Severe droughts affecting 12m people caused a food crisis in countries such as Somalia, Kenya and Ethiopia. Tens of thousands of people died in Somalia alone, demonstrating the dangers inherent in water-stressed regions. Water stress could also lead to higher prices in souther n Europe and the Middle East.
NATURAL CATASTROPHES
CONFLICT
CYBER CRIME
Afghanistan, October 2001
Japan, April 2011
US and European governments came under increasing pressure to end the military campaign in Afghanistan, which was launched in response to the 9/11 attacks in the USA. Around 24,000 people have been killed in the conflict so far. As the economic climate hardens, it is more difficult for governments to justify expensive wars overseas.
Personal details of up to 77 million Playstation subscribers were compromised. Sony Computer Entertainment was attacked reportedly in retaliation for legal action against a hacker. Sony blamed the hacker group Anonymous. The company shut down the PlayStation Network “indefinitely” following the attack although it returned on 14 May, following a 26-day interruption.
Japan, May 2011 The triple catastrophe of earthquake, tsunami and nuclear accident proved to be one of the most expensive of all time. Business interruption in Japan’s hi-tech manufacturing affected companies around the world, demonstrating how vulnerable some business supply chains can be.
Piracy fact sheet Source: International Maritime Bureau
SANCTIONS
TERRORISM
CREDIT RISK
CREDIT RISK
CIVIL UNREST
CREDIT RISK R
Scotland, May 2011
011 Northern Ireland, April 20
Ireland, April 2011
Portugal, May 2011
Spain, May 2011
Italy, Augustt 2011
The Royal Bank of Scotland was fined £3.5m for mishandled complaints relating to retail investment products. The bank received 2,592 complaints about its sales of personal investment plans. RBS allegedly wrongly rejected a significant number of these complaints and was found guilty of mistreating customers, many of whom were older with little or no experience of investment products.
A car bomb killed a police offi ficer outside his home in Omagh and disssident republicans were blamed fo or the attack. The amount of terrorist atttacks in Northern Ireland has increassed over the past two years, and the regio on continues to be one of the most deprrived areas of the UK.
Moody’s, the rating agency, downgraded Ireland’s credit rating to junk status in spite of the European Central Bank’s bailout in November 2010. Ireland had to be bailed out a#er its property bubble burst, sending house prices plummeting and bringing the Irish banking sector to its knees. Junk bond status indicates that there is still a very high degree of risk involved in Irish sovereign debt.
Eurozone leaders officially approved a €78bn bailout for Portugal following speculation over a possible default. A combination of a stagnant economy, jittery markets and problems in Ireland led to Portugal's bail-out in May .
Tens of thousands of people protested across Spain against unemployment and austerity measures. Unemployment is particularly high among young adults making the Spanish society quite volatile. International markets have also showed doubts over Spain’s sovereign debt, the administration may have to increase austerity measures to stabilise the country’s finances.
Police raided the t offices of Moody’s and Standard & Po oor’s as part of an investigation into suspected “irregularities”. It came as speculation over credit rattings and the health of Italy’s finance es reached fever pitch.
High risk Med-high risk Med risk Med-low risk Low risk
Economic recession 1 Political turmoil 2 Climate change 3 Data the# and leakage 4 Regulation 5 Security of IT Systems 6 Energy and commodity prices 7 Crime and corruption 8 Exchange rates 9 Civil unrest 10
Source: StrategicRISK Report,. Represents the views of 30 leading European risk managers surveyed in March/April 2011 Source for underlying world map: UN Global Competitiveness Report, 2011
0
Greenwich
Richmond upon Wandsworth Thames
Lambeth
Crroydon
CIVIL UNREST
CIVIL UNREST
Egypt, January 2011
Israel, August 2011
Mass protests in Egypt led to the ousting of Hosni Mubarak’s regime on February 11 a#er 18 days of protests. Following the revolution in Tunisia in January, the Arab Spring quickly spread to Egypt, leading to the end of the 30-year rule of Mubarak. Uncertainty continues over how the country will govern itself as different factions vie for power.
Two- hundred- and-fi#y thou usand people protested against rising livving costs in cities across Israel. The cost of electricity has risen by 9.3% in the cou untry, caused by disruptions at the Egyp ptian gas company, Gasco. Later thatt month five Israeli soldiers were shot deead on a bus. bullets were Israeli authorities say the b fired from the Egyptian sid de of the border in Sinai.
JAPAN’S NUCLEAR CRISIS The Fukushima Daiichi plant was critically damaged in March by a massive earthquake and tsunami. The event, which had massive implications for Japan as well as the global economy, called into question the safety of nuclear power. In response Germany's environment minister, Norbert Roettge, announced that his country would shut down all its nuclear plants by 2022. Critics of Japan's nuclear safety say that the Fukushima Daiichi facility was vulnerable to earthquakes and that safety standards were not maintained, leading to the current crisis. But some countries continue to build nuclear plants in earthquake-prone areas.
Top five riskiest nuclear plants Japan India Bulgaria Romania
Fukushima Daiichi (crippled) Jaitapur NPP Belene NPP Cernavoda NPP Angra 3 NPP
Five costliest terrorist attacks
500
0
Havering
Haackney
Hounslow
Southwark
1,000
500
Source: Exclusive Analysis
Waltham Forest Redbridge
Brazil
Attacks at sea hit an all-time high in the first three months of this year. There were 142 attacks worldwide, with 97 of these off the coast of Somalia where, with no central government, pirates are free to operate at will. The country, which fronts onto some of the most valuable shipping lanes in the world, is rapidly becoming the world centre for piracy with at least 18 commercial vessels and around 355 hostages currently held by Somali pirates, according to the International Maritime Bureau.
Total attacks: 314 Total hijackings: 31
The Grímsvötn volcano erupted, causing widespread disruption to national and international flights. The ash cloud spread around nor th-west Europe, causing the closure of certain key areas of air space. Approximately 900 flights were cancelled in Europe, leading to disruption and significant economic cost. But it was nowhere near as costly as the previous year’s ash cloud.
TERRORISM
Incidents of unrest by borough
SOMALI PIRACY
Global Incidents
SANCTIONS
0 1 2 3 5 7 8 9 12 15
Conflict
CORRUPTION AND BRIBERY
Enfieeld
Barnet
City of London
September 11, 2001
Fatalities
Just like the murder of Archduke Franz Ferdinand, which precipitated the start of World War 1, the public act of selfimmolation by a young Tunisian man will go down in history as the spark that fired up a regional revolution across the Middle East. Beginning in Tunisia, popular uprisings against despotic regimes also took place in Egypt, Syria, Yemen, Bahrain and Libya, which was the most critical to the world economy because of its immense oil wealth. As this paper went to press, the curtain was closing on more than 40 years of rule in Libya by the tyrant Muammar Gaddafi.
Map Source: Coface NB: Economic risk refers to the average credit risk of companies in a given country. Based on economic and political data.
1,500
1,000
Insured loss (€m)
THE ARAB SPRING
2,000
1,500
Event
Islington
2,500
Attacks Deaths
2,000
Country
e st Cr il u nre Civ Terrorism Co n flic t
Sanctions
Global terrorist attacks 2004-10 2,500
2004
k
Natural catastophes
In July Anders Behring Breivik killed 77 Norwegians in co-ordinated strikes on Oslo city centre and at a youth camp in Utoya. Experts believe the number of terrorist attacks are at historically high levels. The number of terrorist attacks peaked at more than 14,400 in 2006 and over the past five years there has only been a slight decrease in the frequency of terrorist events.
Location of unrest
ris
Corruption and bribery
Years of chronic poverty, unemployment and social deprivation are believed to have contributed to violent outbursts of looting and vandalism in several London boroughs in August. According to later analysis the riots were most likely to occur in areas experiencing both relative deprivation and an influx of relatively upmarket retailers and high income groups.
Date
Eurozone country credit risk map
Banking operations at Nonghyup were disabled by a cyber attack, leaving customers unable to access their money. Victims blamed North Korea for the attack. It was said the so#ware used matched that used in earlier attacks by Pyongyang. According to reports, one of the IP addresses used to break into Nonghyup's system was the same as one used in March for a denial-of-service attack that came from North Korea.
NORWEGIAN TERROR ATTACKS
Source: National Counterterrorism Centre
In a hilly area, Hulu Langat, known to have unstable soil, a landslide killed 16 people. As economic development continues in places like Malaysia and Brazil, more and more dangerous land is being used for development. This increases the risk of landslides in certain key areas such as Rio de Janeiro.
Experts discovered an unprecedented series of cyber attacks on 72 organisations including the United Nations, governments and corporations. Security company McAfee discovered the attacks and said it believed there was one “state actor” behind the campaign but declined to name it. However several other security experts said the evidence points to China.
LONDON RIOTS
2010
Morgan Keegan was fined $220m by the Securities and Exchange Commission (SEC) to settle charges of fraud related to subprime mortgage-backed securities. Thirty thousand investors are estimated to have lost around $1.5bn in the bonds.
Malaysia, May 2011
Korea, April 2011
2009
Seventy-seven people were killed in Oslo and Utoya by a far-right extremist, Anders Behring Breivik. Breivik wrote extensively on the dangers of immigration and the influence of Islam in Europe. The attacks in Norway have caused many people to question the effectiveness of European anti-terrorist intelligence and security measures. With the death of Osama Bin Laden and the Arab Spring, the dynamics of terrorism have changed.
CYBER CRIME
China, June 2011
Locations situated between 2.5 km and 10 km from the city centre, where socio-economic disparities are greatest, face the most risks of unrest compared to locations within the city centre and outer boroughs.
Mauritania
t di
United States, July 2011
CYBER CRIME
2008
Jared Lee Loughner killed six people in a firearm attack in Tucson, Arizona, including chieff US district court judge John Roll. Gabrrielle Giffords, a Democratic meember of the US House of Representativves, was severely injured. The attack tookk place at a political meeting outsid de a supermarket. Giffords recenttly made her first appearance in the US senate since the attack.
NATURAL CATASTROPHES
High risk Med-high risk Med risk Med-low risk Low risk
2007
The US federal government’s credit rating was downgraded from AAA to AA+. This move came a#er a political deadlock made a US default on debt technically possible. The downgrade increased volatility in markets and the US government was criticised, notably by China (the largest owner of US public debt), over how it handled the crisis.
TERRORISM Norway, July 2011
2006
United States,, January 2011
2005
TERRORIS SM
ns ctio San Natural catastrophes Cor rup tion and brib ery
A YEAR TO REMEMBER
CORRUPTION AND BRIBERY
CREDIT RISK United States, August 2011
USA
Attacks on the Twin Towers
1,600
2,982
April 24, 1993
UK
IRA bomb blast in London
775
1
June 15, 1996
UK
IRA bomb blast in Manchester
636
0
April 10, 1992
UK
IRA bomb blast in London
573
3
February 26, 1993
USA
World Trade Center bomb attack
534
6
US TORNADOES Source: RepRisk, rankings based on the amount of negative criticism the plants have received in the press
SANCTIONS
CONFLICT
SANCTIONS
SANCTIONS
CONFLICT
Libya, February 2011
Libya, February 2011
Iran, August 2011
Syria, August 2011
Syria, June 2011
Libya was targeted for international sanctions in an attempt to isolate the Gaddaffi regime and allow a democratic revolution to take place. The international community implemented a visa ban and asset freezes, including trade bans and bans on dealing with the country's sovereign wealth fund and its central bank.
Around 20,000 people killed in an ongoing civil war fought by rebels against the four decade-old rule of Colonel Muammar Gaddafi. In August, TV networks beamed pictures of the rebels seizing Gaddafi’s compound in Tripoli. Sporadic fighting continues as loyalists try to stop the rebels’ advance.
The USA issued various economic, trade , scientific and military sanctions against Iran, the result of Iran’s violent repression of major protests following elections in 2009 when president Ahmadinejad was re-elected. The sanctions also relate to Iran’s supposed aspirations to build nuclear weapons.
Sanctions were imposed on Syrian stateowned companies and banks due to the violent repression of protests by the ruling regime. President al-Assad showed himself to be uncompromising in his approach to the protest to the point where events have escalated into a civil war.
Under increasing pressure to cease the violent repression of dissents, president Bashar al-Assad used tanks and snipers to force people off the streets as well as cutting off electricity and limiting food supplies. Around 2,400 people have been killed so far.
A severe storm season struck the USA in April with 305 tornadoes causing around €4bn worth of damage. The number of tornadoes was more than double the April average of 161. Risk Management Solutions Matthew Nielsen stated: “This tornado outbreak is set to become one of if not the costliest severe convective storm event in US history.” Overall, the 2011 tornado season was extremely active and surpassed last year’s totals for number of tornadoes and damage. In the first six months of 2011, there were approximately 1,600 tornadoes (compared with 1,282 in 2010) that caused an estimated €7bn worth of insured property damage, according to the Insurance Information Institute. Top ten tornado-prone areas in the USA Source: RiskMeter Commerce City Denver Aurora North Little Rock Houston
Sources for country risk scorecards: Coface Country Risk Assessment, Aon 2011 Political Risk Map, Transparency International Corruption Perception Index, Maplecro! Environmental Risk Index, Maplecroft Human Rights Risk Index
Tampa St. Petersburg Hollywood NB: Economic risk refers to the average credit risk of companies in a given country. Based on economic and Hialeah Miami political data.
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