World leaders — and the rest of the world — saw the uprising andtensions explode with recent protests against world leaders at the G20Summit in July.

Protectionism, even without the countless demonstrations andmarches that have sprung up against it, is a breeding ground forpolitical risk and disruption. The protests against protectionismand populism are evidence that these phenomena are as alive asever.

Related: 18 emerging risks for the insurance industry, itscustomers and society at large

U.S. trade and economic policies are in a state of flux,shifting to a more protectionist agenda, and the risk managementcommunity is acutely focused on what that means for theirbusinesses. As we've seen, this is not just an American phenomenon.U.S. risk managers that operate globally need to carefully lookbeyond our borders to see not only how other countries are reactingto our policies, but to their movements toward protectionistagendas as well.

Death of globalism

In a sweeping backlash to globalism, the “our country first”movement is focused on keeping jobs and investment within borders.There is no longer a blind acceptance of globalism. As we see withBrexit, the UK's vote to leave the EU was a nationalist action,reflecting a need for economic, foreign and domestic policycontrol. We are seeing movements like this in Germany and Francewhere parties are pushing for restrictions on immigration and forjobs to stay within their countries. A poll from IPSOS conducted last year showsthat Italy, France and Sweden have nearly half of their populationsready for an “exit.”

Related: John Nelson on how Brexit will impact Lloyd's ofLondon [video]

Though one could look at the state of Europe and see majorlosses for populism and nationalism with the defeats of Marine LePen in France and Geert Wilders in the Netherlands, theanti-globalism strain is still pervasive in Europe. In recentyears, there is a growing perception that globalism is synonymouswith neglect for one's own country and these sentiments are fuelingthe strength of populist and protectionist messages.

Tensions heightened

Even though populism has been sweeping across Europe as it hasin the U.S., tensions have only heightened between the U.S. and itsmajor allies in Europe. Following the most recent G7 Summit inItaly, German Chancellor Angela Merkel said: “the times when we could fully rely on others areto some extent over,” showing increased wariness and movementtoward protectionism.

Related: The 10 most costly U.S. riots

The G20 Summit has fared differently from the G7 Summit but notany further from the themes of uncertainty and risk. The clashesbetween police and protesters are just one example of the types ofrisks involved in such a politically turbulent atmosphere.

All of these actions create uncertainty which makes global tradeless predictable and riskier. In this heightened global state offrustration, people are feeling disaffected and are committing actsof violence to let their leadership know. Risks of politicalviolence and retaliation are on the rise. At the same time, we arealso seeing a significant uptick in terrorist attacks in majorcities and public spaces.

Related: Wealthiest nations see terror attacks creep to11-year high

The risks from increasingly nationalist policies and ourvery own “America-first” strategies are taking various forms.(Photo: Shutterstock)

On the radar

Clearly, the vast theme of disruption and uncertainty is puttingestablished nations and the enterprises located in these nations onthe radar for political risk insurance considerations. At the sametime, the risky countries we've watched for the past few years —such as Mexico, Venezuela and various Middle Eastern countries —are still risky and we expect further turmoil in those regions. Theresult is a new imbalance and weakening of the global supply chainthat will create challenges for companies that trade and operate invarious parts of the world.

Related: Looking to expand in another country? Check thepolitical risk first

According to Dun & Bradstreet's Chartered Institute of Procurement &Supply (CIPS) Risk Index, the “Global supply chainrisk grew to a record high at the end of 2016 as the CIPS RiskIndex, powered by Dun & Bradstreet, rose to 82.64, from 79.14at the end of 2015. The figures put global supply chain risk at thehighest level in 24 years following a year in which the pace ofglobalization appeared to slow.”

The risks from increasingly nationalist policies and our veryown “America-first” strategies are taking various forms. Here arethe top three risks to watch:

1. Governmental action and intervention

With new regimes or changes in foreign relations, expect to seegovernments retaliate by not honoring agreements or obligationswith foreign companies doing business in their country. They mightdeliberately cancel a contract, create additional competition orpass laws to restrict foreign businesses.

2. Changing trade agreements/structures

The trade agreements businesses relied on, such as NAFTA or theTrans-Pacific Partnership (TPP), will either be revised ornullified. President Trump has agreed to pursue renegotiation ofNAFTA despite termination still being on the table, and he hasalready withdrawn from the TPP. This will be magnified over thenext year with threats and actions to close borders. The insuranceindustry and risk managers should not only be looking to US tradeagreements, but also to trade agreements between other countriesthat might create disruption for US trade.

3. Economic sanctions

Government actions to impede trade with another country is anongoing risk. An increase in sanctions will slow the movement ofgoods and also result in non-payment. If a party is not able toexport, bills will not be paid.

Those who have worked in the political risk insurance market formultiple decades know turmoil is cyclical and not concentrated injust one region. Business continuity risks can be managed, butcompanies must take an active role. It starts with conductingregular assessments of risks along the supply chain. A strongcrisis management program will include staying up to date on wherea company operates, understanding contractual obligations and beingaware of political risks.

Through these steps, the risk management process should identifyweaknesses and risks facing critical assets, and developcontingency plans for likely outcome scenarios. Be a demandinginsurance buyer and find tailored insurance and risk managementsolutions to address your risk profile.

Related: Chubb CEO says U.S. must avoid risks of isolatingitself

Todd Germano is executive vice president ofAllied World'sglobal crisis management division. Germano joined Allied World in2008 and previously worked for AIG for 11 years. He is a graduateof Fordham University and the University of Connecticut. Germanocan be reached at [email protected].