Geopolitical Weekly - The Business Impact

Analytical Insight provides a weekly overview of global geopolitical events and the potential impacts these events may have on business operations.

The Changing Face of Terrorism

The recent Parisian attacks on satirical magazine Charlie Hebdo are a solemn reminder of the persistent threat that exists from people acting in the name of terrorism. Although these attacks were inspired by the ideology of extremist Islam, they were neither orchestrated, nor financed by established terrorism groups. These attacks, along with the Sydney Siege and the Canadian Shooting are an increasing and concerning new modus operandi – The Lone Wolf Attack.

2014 had 60% more lone wolf attacks than any other year since 9/11. While these attacks do not cause mass casualties or catastrophic destruction, they spread terror and fear by demonstrating the reach of extremism and also the everydayness of targets against the fight for jihad. Anyone can become a victim of terrorism, at anytime, anywhere.

The Business Impact

Physical Risk - While the risk to business from terrorism in general may not have changed, the nature of the threat and the required response has. The likelihood of a large-scale terrorist attack has been reduced by effective counter-terrorism measures, however, the likelihood of a lone wolf or a small scale terrorist attack has increased. The reach of the threat has also increased beyond high risk locations and through to all corners of the world. Businesses across the globe, no matter how big or small, should be prepared to be directly or indirectly affected by lone wolf terrorism. Businesses should ensure they have effective security plans, response plans and continued awareness of the threat terrorism poses to their business operations.

Economic Risk – It is unlikely that lone wolf attacks will affect the economic conditions in the same way large scale attacks can. The cost of lone wolf attacks are negligible and are unlikely to affect the planned spending of the government, FDI or insurance rates. This stability will prevent economic downturn and market fluctuations post a lone wolf attack.

Get a free Terrorism Risk Assessment for your business here

A Game of Thrones

Today, King Abdullah of Saudi Arabia died at the age of 90. Crown Prince Salman has taken the throne.

There has been much contention surrounding the succession of the Crown Prince upon Salman’s succession to King. King Abdullah had named his youngest brother, and last in the fraternal succession line, Muqrin as Salman’s successor. This appointment was to ensure there wasn’t a power vacuum in the event of both Abdullah’s and Salman’s deaths.

Salman has been quick to announce Muqrin as his heir in a statement released by the palace today, however the appointment to Crown Prince will need to be agreed by the Al Saud family Allegiance Council.

The Business Impact

Political Stability - The succession of the throne was always going to be contentious as factions of the ruling Al Saud party fight to maintain power and control. Salman’s announcement of his immediate succession will reduce any immediate concerns of political instability and reduce the risk of economic reactions in response to the death of the King. However, as Muqrin is the last in the fraternal succession line, King Salman will need to establish a new succession plan and name a new Deputy Crown Prince. This is likely to cause increased internal factions within the Al Saud family and may lead to a period of political stalemate. This may cause longer term issues including a deterioration in regional relations and a reduction in investor confidence.

Security Threat - The death of King Abdullah comes at a time of heightened security for Saudi Arabia. Increased Islamic insurgency within the Kingdom, cross-border spillover from Al-Qaeda in the Arabian Peninsula and the ongoing threat from ISIS in Iraq present significant threats to the security situation within the country. The potential lengthy maneuver of power between the successors could hamper the country’s ability to respond to these threats in the short term. Businesses operating in Saudi Arabia should ensure they fully understand the magnitude of the current threats and have adequate security measures in place to mitigate the risk to business operations.

Civil Unrest – There has been an underlying tension in Saudi Arabia since the outbreak of the Arab Spring. Shiite Muslims, who have complained about religious discrimination and economic marginalisation for several decades, may use this perceived weakness in rule to express their discontent with current conditions. There have also been tensions among the Saudi youth in response to inflation and high levels of unemployment. While it was unlikely the public would rebel against King Abdullah, due to his popularity, it is possible the transition of power will prompt a response from the disenfranchised members of society. Businesses operating in Saudi Arabia should monitor the situation closely over the coming months, and ensure they have business continuity, security and extraction plans in place in the event of an uprising. While the threat of this is currently low, the situation may escalate rapidly as seen in other countries in the region in previous years.

If you would like further information on the situation in Saudi Arabia, contact a member of our Middle East Analysis Team.

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