Alternative Investment

Political Unrest—What’s Ahead and How Businesses Can Prepare

The events of January 8 in Brazil–following almost two years to the day of the attack on the Capitol on January 6, 2021 in the United States–herald the arrival of a new form of risk for firms doing business globally. We have long known that the period of time before elections in democratic regimes can introduce uncertainty regarding the composition of the government (and the policies it will likely pursue) in the aftermath of the election. At this point, however, we must acknowledge–and plan for–the possibility that elections in democratic countries can also lead to periods of political instability after elections have been conducted.1

The “playbook” for this political instability has now come into focus and consists of three key components.

  1. Pre-Election Claims of Fraud. The first is for political candidates to claim before elections are conducted that the results are likely to be fraudulent.
  2. Post-Election Results Claims. The second is for those same candidates—should they lose the election—to refuse to recognize the results of the elections and/or to claim in the elections’ aftermath that the results were fraudulent, even in the absence of any evidence suggesting that to be the case.
  3. Mass Protests to Incite Criminal Violence. The final component involves mass protests leading to physical attacks against the infrastructure of government.

Moreover, the growing rise of social media usage makes it easier to both spread claims of fraud and to organize these kinds of mass actions. This is yet another reason to expect the playbook to be repeated in the future—but also an opportunity to identify ahead of time when actors are likely to be attempting to use this playbook to incite criminal violence as opposed to engaging in more legitimate forms of political protest.

As we continue to see more violence and less understanding in these situations, the public and private sectors must evaluate their individual roles. For governments, this will mean predicting and acting on the predictable by preparing to, and, mitigating, known and likely risks. This almost certainly means adding layers of security prior to significant moments in the transition of power and providing even more transparency in elections.  

For businesses, this means carefully considering the safety of their people, the security of their facilities, infrastructure and supply chains, and more generally the mood and inclinations of their employees.  Businesses should also consider a fresh look at their security posture, continuity policies, and procedures for protecting people and facilities to ensure they are aligned with the new modern-day threat environment. In particular, as all security should be conducted in a risk-informed basis, businesses should consider increasing the frequency by which they conduct risk assessments—and expanding that list of risks to include previously routine events like elections and transfers of power. This is not only the right thing to do for employees and customers, but careful risk planning and mitigation can also provide a material competitive advantage. These efforts should include an organization’s public-facing elements. For consumer brands, social media ambassadors or individuals representing a brand, breaking the law or engaging in hateful conduct can be detrimental. Concurrently, social media analytics can also be useful in tracking the likelihood of political upheaval and any impact to your brand.

The period in which elections can result in political instability in democratic societies is expanding, as are the dangers posed to democratic stability around elections generally. As discussed above, periods of change are always fraught for societies, organizations, and people. As the window of risk around lawful changes in power expands, all should remember that transparency, comprehensive investigation not just of acute problems but also their root causes, and accountability will, long-term, strengthen all. 

Sources:
This is in addition to the standard uncertainty that may be present around the post-election composition of the government in countries with parliamentary systems of government where multi-party coalitions are common.

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