Protect your business against the effects of civil unrest

THIS week marks the first anniversary of civil unrest that devastated communities and  businesses in both the Gauteng and KwaZulu-Natal provinces in July of last year.

People were fear-stricken and did not feel safe in their own communities, and many businesses were hit hard due to a massive loss of stock and damaged infrastructure.

Many KwaZulu-Natal residents live in fear of the looting crisis repeating itself, and more concerned are the business owners due to the thousands to millions of rands that were lost during the civil unrest.

According to The Allianz Group, a global financial services provider, with services predominantly in the insurance and asset management business, there will soon be a rise in civil unrest incidents as the cost of living crisis has followed hard on the heels of the Covid pandemic.

“Political risks and violence ranked as a number four business risk in South Africa in the Allianz Risk Barometer 2022, demonstrating the significant risk for companies in the current environment,” said the company in a recent statement.

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Allianz Global Corporate & Specialty (AGCS) has released a statement which contains useful tips and advice to help businesses better equip themselves against potential future civil unrest.

Here are a few questions and answers from the asset management business that will help you protect your business and personal assets against any forms of civil unrest:

Do businesses have to be direct victims of civil unrest to suffer financial losses?

Businesses do not have to be direct victims of civil unrest to suffer financial losses. Revenues can suffer if the surrounding area is cordoned off for a prolonged time or while infrastructure is repaired to allow the re-entry of customers, vendors and suppliers.

What can businesses do to prepare for political violence?

Preparation is key – in particular, for exposed sectors such as retail. Businesses need to review their business continuity plans (BCP) and should be aware of their surroundings and what is happening around them. Typically, these continuity plans only focus on national catastrophes, but there is a need for BCP plans to address political disturbances and other types of business disruption like cyber. Having defined and preferably tested procedures in place is crucial – these should include staff, client and general communication and social media plans. It is imperative for companies operating in countries that have a high risk of political or social upheaval to think deeply about how they can best protect their assets and people.

Who are the key stakeholders that businesses could work with before, during and after political violence?

Businesses will need to work very closely with crisis management experts from government, insurance and civil society to ensure that they have highly comprehensive and agile strategies. The experts need to enable clients to carry out evacuations in high-risk situations at short notice and provide prevention, risk mitigation and on-the-ground response services for emergency incidents. In evacuation cases, it’s a question of providing the resources and staff for rapid evacuation from politically unstable areas.

What can businesses do in terms of Strike Riot and Civil Commotion (SRCC) insurance?

Companies should review their insurance policies. In South Africa, the South African Special Risk Insurance Association (Sasria) provides cover for damage to property caused by special risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorders. Looting is not a standalone Sasria peril and will only be considered as a valid claim in terms of Sasria if it occurs during an active Sasria peril for which Sasria accepts liability. Commercial and personal insurance policies in South Africa do not provide cover for damage to assets as a result of these types of events as insurers are precluded from underwriting these risks. Sasria insurance is available for material damage, business interruption, money, goods in transit, and motor and construction risk. For commercial clients, Sasria cover in terms of business interruption is limited to fixed expenses or standing charges and net profit, but not for the traditional contingent business interruption covers such as losses following damage to premises of customers and suppliers, and to the supply of public utilities like water and electricity.

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What does political violence insurance cover?

Political violence insurance provides coverage for terrorist acts, acts of sabotage, riots, strikes, civil commotion, malicious damage, insurrection, revolution, rebellion, coup d’état, war, civil war or counter-insurgency. Covers vary by line of business or country, but business insurance covers damage to property and contents when the cause is fire, looting or vandalism caused by civil commotion, protests and riots. Additionally, common extensions include denial of access (businesses shuttered because authorities have closed the area, whether damaged or not), loss of attraction (being closed, businesses cannot attract customers), and other civil disturbances.

When rioting occurs, it can be overwhelming and stressful to plan combative tactics to protect your business or business property. Here are a few quick planning tips from Alliance Group that will help you stay prepared:

Quick planning tips

• Maintain ongoing close communications with local, provincial and national law enforcement agencies.
• Co-ordinate response plans across functional disciplines (police, fire, medical, and private sector).
• If time permits, install coverings over windows, doors, or other potentially vulnerable entry points (plywood or other suitable material) and place physical barriers to limit access.
• Close business before high-risk times (evenings/night hours, scheduled protests, etc)
• Consider adding additional security staff
• Remove exterior materials that can be burned, thrown or otherwise used to damage people or property.
• Ensure exterior lighting is turned on to increase visibility.
• Remove/secure high-value inventory (electronics, medicine, cash, securities).
• Consider how quickly staff can recover and get back to work following an incident.
• Investigate if your company is over-reliant on a particular supplier or customer; avoid aggregation of suppliers.

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