THE UPRISINGS IN EGYPT AND TUNISIA SIGNAL THAT COMPANIES NEED TO STAY
ALERT TO THE KINDS OF EVENTS THAT COULD CHALLENGE THEM GLOBALLY.
Winds of Political Risk
treasuryandrisk.com
WHILE IT’S hard not to be exhilarated by the peaceful revolution in Egypt that ended
the 30-year dictatorship of Hosni Mubarak, risk managers and executives at Google
might be concerned about the role one of the company’s local employees played
in that process. Google regional marketing manager Wael Ghonim spent 12 days
blindfolded in a prison run by Egypt’s secret police after he was identified as a key
figure using social media to help orchestrate demonstrations. And when Ghonim was
tion does not appear to have
hurt the giant Internet com-
pany’s reputation in Egypt, such
activism might not play well for
American companies, Schwartz
says. “As a rule, European com-
panies have been more proactive
about insuring against political
risk. American firms have tended
to take a more roll-of-the-dice
attitude of dealing with things
when they happen.”
“Whenever you have a signifi-
cant world event like we’ve just
seen, interest increases among
business managers in how you
can mitigate perils, including
political perils,” says Ken Moyle,
executive vice president of Co-
face North America, a division
of Coface, the Paris-based global
insurer.“Of course, when these
things happen, it’s too late to
think about insurance in those
markets where it’s happening.”
Until recently, companies
could have insured against po-
litical risk in Tunisia or Egypt
at low rates, notes Sam Wilkin,
assistant director of global
analysis at Oxford Analytica,
a U.S.-based risk consultancy.
“Now it would be very costly.”
He compares the situation to a
homeowner who waits until the
wind is knocking down trees to
try to buy hurricane insurance.
Wilkin warns that political
risks don’t go away. They just
released by the secret police, he
went straight to Cairo’s Tahrir
Square, grabbed a microphone
and rallied seemingly demoral-
ized protesters to push on for
Mubarak’s resignation.
While Ghonim’s role as a hero
of the first social media revolu-
Google elsewhere, especially in
authoritarian countries, ranging
from China to Zimbabwe.
The fast-moving events that
have ousted long-standing dictators in both Tunisia and Egypt
are a wake-up call to global
companies that they may not
have been paying sufficient attention to yet another kind of
risk—this time, political.
“I wouldn’t say that it’s a
matter of companies having ig-
nored political risk,” says Roger
Schwartz, national political lead
at Aon Crisis Management.
Companies have just been self-
insuring themselves on political
risk, he adds. “I think that after
Tunisia and Egypt, they may be
This is particularly true for
Illustration by Stuart Briers
People Power and
social media add a
whole new layer
of complexity to the
political risk equation.
—OXFORD ANALYTICA’S
WILKIN
