Should Civil Unrest Remain on Risk Registers? Part II

Protecting Your International Students’ Health and Happiness – Issue 71
April 24, 2018
April 2018 Member Matters
May 4, 2018
Protecting Your International Students’ Health and Happiness – Issue 71
April 24, 2018
April 2018 Member Matters
May 4, 2018

Should Civil Unrest Remain on Risk Registers? Part II

Harry Rosenthal, General Manager, Risk Management Services, explains why, contrary to common perception, civil unrest is far from an outdated concern

In Part I of this series, we asked whether “civil unrest” should remain off Australian companies’ corporate risk registers in the 21st century. In the previous century, this peril occupied a prominent position on such registers, especially in the US during the turbulent 1970s when protesting, rioting, and urban bombing were far more common than today.[1] Nowadays, envisioning living in such turbulent times may seem unlikely – this class of risk appears remote compared to issues such as changes in regulation or supply chain interruption. These civil and social risks from the ‘70s are fading from memory – but perhaps we should ask if erasing them is justified, before we archive them completely.

What makes civil unrest unique is not simply its inherent, destructive nature. It is a widespread rejection of your organisation and the social order in which it operates. Typical stakeholders could include neighbours, customers, suppliers, or employees, who, for whatever reason, have lost faith in you and are now dedicated to the physical destruction of your operations, in order to better achieve their own needs. Civil unrest can be localised to a specific region or involve entire countries. We have recently seen examples in the US where large groups oppose political candidates (i.e. anti-Trump marches and protests), or vocalise dissatisfaction with Police policy and methods (i.e. Black Lives Matter).

Risk Skills Needed in Civil Unrest Circumstances

As risk professionals, what factors should we be considering? What are the key challenges of civil unrest and how do we respond when this peril manifests? The first word that should occur to a risk professional examining the potential of civil unrest is “triage”. In a civil unrest scenario, numerous choices must be made – often with very little information or time for consideration, and with delay bringing even worse consequences.

Triage, perhaps one of most difficult and most dreaded jobs in emergency response, it is the systematic process of sorting patients/victims/resources of a disaster into groups for further treatment or attention. In a civil unrest scenario, you or your organisation may be suddenly forced into a sort of triage role, to prioritise the allocation of limited resources like food, water, electricity, communications, air conditioning, safety or transportation. There may not be time to prepare a detailed set of rules or decision trees for this resource allocation. As a result, such decisions can either increase or decrease the perception of fairness and either promote or destroy stakeholder/staff buy-in and needed cooperation.

In real-world disaster scenarios, where the fabric of society is torn, triage becomes an operating system of its own, and is often created and adjusted on the spot as the situation dictates. Perhaps the most illustrative example of this was the 2010 earthquake in Haiti, a large event affecting 3 million people and believed to have caused between 100,000-160,000 deaths.[2] This natural disaster resulted in sporadic civil unrest and a medical disaster that speedily overwhelmed the clinical resources of the country and resulted in a global emergency response. Even with the global response, there developed severe shortages in medicines and some medical devices. For example, the supply of medical oxygen was quickly depleted, resulting in a very limited ability to conduct oxygen therapy for both chronic and acute patient care. From these circumstances came stories about the sudden shortage of medical oxygen in Port-au-Prince,[3] and the numerous times that medical staff had to make decisions about who would receive the limited supply of available medical oxygen, often making a decision between quake victims undergoing surgery or healthy survivors with chronic and life-threatening respiratory problems. It was triage of a different type, not only selecting those who they could save, but also selecting those they could not, due to the lack of oxygen cylinders.

When Experts Get it Wrong: A Recent Example

Such triage is often left to “experts on the scene”. A prominent example of experts getting triage seriously wrong can be seen during the Hurricane Katrina, which struck New Orleans on 29 August 2005 resulting in extensive flooding and windstorm damage.[4]

Hurricane Katrina is a classic case study for risk professionals, showing how quickly situations of civil unrest can develop. The Memorial Medical Center survived Katrina intact, only to be left as an isolated island when the levees broke and the city flooded.[5] For our purposes, what made this case so unusual was the decision by medical staff after a couple of days to begin to euthanise the family pets in the building, followed by a later decision to euthanise as many as 23 seriously ill human patients. This decision, which resulted from a local external breakdown of civil order, took place not after weeks of isolation and hellish conditions, but rather after a few days. In some cases, patients were euthanised after only four days of storm-imposed isolation. While we may think of civil unrest or other rips in the social fabric occurring after an extended period of build-up, it is clear that in fact imperfect triaging and risk decision-making can occur after a surprisingly short time, even amongst experts.

Conclusion

There are plenty of once-prominent risks now fading from the foreground, such as the risk of inflation, AIDS, and the hard landing of China. These, alongside the risk of “civil unrest”, seem halfway out the door when it comes to possibilities still actively considered. But it seems ill-advised to close the file on civil unrest as a risk, even if we don’t see the success of protests and movements themselves as a threat to our organisations.

There are probably civil-unrest response plans nesting within most community terrorism-response plans. In the event of widespread security fears, plans might include imposing and enforcing martial law, establishing curfews, and enacting other methods of regulating the population and movement of people. There always exists the possibly that the population might then react poorly to such restrictions and further provisions will need to be made to manage unrest.

It is also important to note that civil unrest has not escaped the eye of global risk financers since the 1970s. The risk professional should be aware that in many cases, commercial insurance may not provide any support to insureds in a civil unrest scenario. Common policy exclusions include events such as: armed uprisings, war, usurped power, insurrection, invasion, rebellion, and civil war.[6] Most would be aware there is, however, coverage for terrorism, but that’s still very much a work in progress, and there remains many issues around the extent and triggers of commercial coverage in this area. This is a risk for which there is currently no conventional risk financing available, and therefore it should stay in our collective risk consciences a little longer.

[1] These events are outlined in Bryan Burrough’s book, Days of Rage. http://time.com/4501670/bombings-of-america-burrough/
[2] http://news.bbc.co.uk/2/hi/americas/8507531.stm
[3] http://www.pri.org/stories/2010-02-23/doctors-face-ethical-decisions-haiti
[4] http://www.nhc.noaa.gov/data/tcr/AL122005_Katrina.pdf
[5] An excellent book on the disaster and its human impact, Five Days in Memorial (2013) by Dr Sheri Fink is an investigation of what occurred at the Medical Centre. http://www.nytimes.com/2013/09/04/books/five-days-at-memorial-by-sheri-fink.html
[6] https://www.lexisnexis.com/legalnewsroom/insurance/b/applemaninsurance/archive/2011/08/15/exclusions-in-property-insurance-policies-new-appleman-on-insurance-law-library-edition-chapter-43.aspx
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