Geopolitical risk and insurance: Why sabotage, terrorism and political violence should be on the board’s agenda

Managing geopolitical risk: A strategic priority for international businesses

Rising global tensions, trade wars, and civil unrest are no longer rare or distant threats, they are daily realities. Yet despite their growing impact, geopolitical risks such as sabotage, terrorism, riots and war are often missing from the boardroom agenda. For internationally active businesses, ignoring these risks can have serious consequences. From physical damage to operational disruption and reputational loss, the stakes are high. Now is the time for boards to take a proactive approach—starting with a clear strategy for risk transfer through specialised insurance.

Insuring against political violence: what are the options?
Assets, goods, and people operating in volatile regions can be protected through layered coverage options. These policies can be tailored based on the severity and type of risk:

Terrorism & sabotage insurance
This provides coverage against targeted attacks aimed at damaging property, infrastructure or operations—whether politically motivated or not. Often required for facilities in high-profile or strategic locations.

SRCC Insurance (Strikes, Riots and Civil Commotion)
An extension of terrorism insurance, SRCC covers events such as:

• Labour strikes
• Violent protests
• Localised riots or unrest

This is particularly relevant for companies operating in countries with growing civil unrest or fragile political climates.

 Political risk insurance

1. This broad, high-level coverage includes:

• Coup d’état
• Rebellion, mutiny, insurrection
• Civil war and war
• Government confiscation or forced abandonment
• Currency inconvertibility and contract frustration (optional)

Political risk insurance is essential for companies with fixed investments, supply chains, or personnel in geopolitically sensitive regions.

Q&A

1. Why should geopolitical risk be on the agenda at board level?
   These risks can lead to significant business interruption, asset loss, or harm to employees—especially in unstable regions. Boards are responsible for safeguarding continuity, and geopolitical events increasingly pose a direct threat to that continuity.
2. What is the difference between SRCC and terrorism coverage?
   Terrorism coverage protects against targeted, politically motivated attacks. SRCC covers broader civil unrest, such as spontaneous riots or labour-related disturbances. Both are often excluded from standard property insurance and must be arranged separately.
3. Which companies benefit most from political risk insurance?
   Political risk insurance is crucial for businesses with international assets or operations in countries with unstable regimes. Think of companies in logistics, energy, agriculture, or infrastructure that have fixed investments or long-term contracts abroad.