War, rising costs for air travel, and piracy are risks that might affect your business travelers this year, according to the Global Risk Forecast 2023, a report produced by risk experts Crisis24. Crisis24, a BCD Marketplace partner, provides security advisory, crisis management, cyber security, executive protection and journey management, and travel security services.
Global Risk Forecast 2023 explores the implications of geopolitical events such as the Russia-Ukraine conflict and global energy disruption and category risks such as extreme weather events and low-level piracy. With these insights, you can better prepare for and manage risk situations in your managed travel program. For example, when you consider the repercussions of the Russia-Ukraine conflict, you might initially think about travel restrictions. Yet, food scarcity, energy disruptions and higher price for goods and services might also present challenges to your bottom line and your business travelers’ journeys. Piracy, for example, may not affect your travelers’ safety, but could result in increased shipping costs for products your company uses.
What’s in the report?
Repercussions from the Russia-Ukraine conflict
The wider repercussions from the conflict between Russia and Ukraine will continue to play out this year, with ramifications of food scarcity, disrupted energy supplies and inflation.
Reduced grain exports (from both Russia and Ukraine) and lower fertilizer production have created issues across Africa and the Middle East; knock-on effects include growing food scarcity and generally higher prices. Countries with a high dependency on imported food are likely to be the most affected.
The disruption to energy supplies, particularly in Western Europe, has resulted in sharply higher prices not just of gas but also of substitute fuels, as countries compete for finite resources. Energy shortages may result in Europe, prompting European governments to implement unpopular energy restrictions, extending into spring 2023, and possibly reappearing in the winter. Power cuts and international disputes over oil and gas could disrupt transport and travel.
Rising cost of living
The discontent caused by sharply higher rates of inflation increases the prospects for civil unrest. Higher prices will reduce demand for goods and services, impacting companies and countries most reliant on exports.
Growing insecurity and political instability
Economic hardship and growing discontent are never good news for security and stability. Growing wealth inequalities, with access to essential goods and services becoming more limited, will increase the feeling of marginalization among some social groups and may drive people towards political extremism, which could result in civil unrest, crime and terrorism.
Growing insecurity and instability could provoke civil unrest and industrial action, which may result in social and structural change in some Middle Eastern countries. In Africa, an increased cost of living will see burglaries and kidnapping for ransom increase in 2023. Terrorism could also increase as extremist groups exploit the situation, intensifying recruitment among disaffected populaces. Government stability could be threatened.
Government funding cuts affecting policing may result in higher levels of criminality across Latin America. Elevated levels of gang violence may result, as criminal groups take advantage of the policing vacuum to compete for influence.
Return to air travel
The rise in air travel operating costs will linger in 2023, as fuel and labor costs increase and are largely passed on to customers through higher fares. Western airlines will also have to contend with the continued closure of Russian airspace. Airlines are likely to cut routes (particularly between Europe and Asia), increase fares and expand partnerships (as a cost-effective way to extend their reach of their networks).
New technologies will improve the passenger experience but could expose safety and security vulnerabilities.
Extreme weather effects
The La Nina weather event has occurred for three consecutive years. It has contributed to an upward trend in extreme weather events, promising more frequent and intense periods of drought, extreme heat and torrential rainfall. The latest La Nina event is expected to end this year, but its secondary impacts, including disruption to transport and utilities, food shortages and wildfire threats, will persist through 2023.
Rising low-level piracy
Low-level piracy, which typically entails robbery from vessels close to shore, is likely to increase and emerge in areas where it has not previously been reported. The spike will result in increased shipping costs.
Fallout from the COVID-19 pandemic
COVID-related disruptions will continue this year. Global supply chain issues will likely persist into 2024 due, in part, to these disruptors.
Other health-related issues
Vaccine-preventable disease immunization programs were largely halted during the pandemic, particularly in countries with underfunded healthcare programs. As a result, countries around the world are now seeing a rise in infections among these diseases. Aside from the health implications, this also has economic impact, as employee absences increase. Many countries are not unaccustomed to outbreaks of these conditions (as immunization had prevented them in the past). Larger countries and those with government-funded healthcare systems should cope better.
Asia Pacific supply chains
International agreements are restructuring the way supply chains work in Asia Pacific. The RCEP (Regional Comprehensive Economic Partnership) agreement signed in November 2020 ties some of Asia’s largest economies more closely to China. The IPEF (Indo-Pacific Economic Framework), launched by the U.S. in May 2022, has emerged as a counterweight to Chinese economic leadership in Asia. This also represents a clear escalation of economic competition between the U.S. and China, which will drive a shift in supply chains in the medium term.
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