Sixty-five percent of North American business leaders fear this election year will impact their ability to trade internationally, with 32 percent of U.S. leaders saying political risk is their No. 1 threat.

In January, Beazley surveyed over 3,500 business leaders in the U.S., Canada, the UK, Singapore, France, Germany and Spain.

The results, published in Beazley’s Risk & Resilience Report: Geopolitical Risk Snapshot 2024, found that 30 percent of international business leaders believe that political risk is the biggest threat they face this year, with 36 percent believing they are operating in a high-risk environment.

In this “year of the election,” when over 60 countries are holding major elections, businesses worldwide face significant political uncertainty, said Chris Parker, head of terrorism and deadly weapons protection at Beazley.

“While previously some property insurance policies gave firms some cover from the risks associated civil unrest, property carriers have begun to exclude this risk, proving the importance of having standalone political violence and strikes, riots and civil commotion cover.”

In the U.S., where a presidential election is looming and the events of January 2021 are still front of mind for many, 25 percent of U.S. business leaders surveyed feel unprepared to deal with the political risks they face.

Globally, the Russian conflict against Ukraine continues to threaten peace in Europe, the conflict in Gaza risks igniting further unrest across the Middle East region, and concern over a Chinese invasion of Taiwan remains. There have been nine coups in West Africa, Central Africa and the Sahel region since 2020.

Lenders increasingly demand political risk protection, including trade credit risk, terrorism and war insurance coverage, for international firms looking to support the global energy transition, particularly in politically unstable regions. Twenty-seven percent of executives in the global energy and mining sectors say they are unprepared to deal with war and terrorism risks. These challenges have left businesses worrying about their ability to trade internationally.

Roddy Barnett, Beazley’s head of political risks and trade credit, said specialty insurance can play a vital role in providing financial reassurance to businesses.

“With growing political tensions across the globe, standalone cover for political risk and trade credit, political violence, strikes, riots and civil commotion is increasingly important,” Barnett said. “As businesses become exposed to a growing range of perils, the need to move away from pure terrorism cover is apparent, with businesses in major Western democracies being particularly affected.”

Businesses need proactive contingency plans for macroeconomic and political risks that they are exposed to, said Matthew Dunne, focus group leader, U.S. political risk & trade credit at Beazley.

“Diversification of supply, understanding local investment risk, having cover in place before something happens are all vital to building a robust risk mitigation strategy.”