Corporate anxiety over political violence has reached a turning point, with the threat now sitting at #7 in the annual Allianz Risk Barometer 2026 – the highest ranking the risk has ever held, as wars in Europe and the Middle East spill into boardroom calculations for the year ahead.
The reshuffle at the top of the threat list is being driven by war itself. In Allianz Commercial's companion Political Violence and Civil Unrest Trends 2026 report, 53% of respondents globally named armed conflict as the political violence exposure they fear most, displacing civil unrest from the lead position.
Regional readings skew higher still, with around 60% of respondents in Europe and Asia-Pacific flagging war as the top risk. Civil unrest ranked second at 49% globally, with terrorism and sabotage close behind at 46%.
Conflicts in Europe and the Middle East have disrupted trade flows, strained alliances and heightened risks to business assets, the report said. Even before the current US-Iran conflict, business assets were estimated to have seen a 20%+ increase in exposure to conflict over the past five years.
For underwriters, the Middle East war could prove costlier than initially modelled. Allianz Commercial said the potential financial loss quantum for political violence and terrorism (PVT) lines may exceed PVT claims tied to the war in Ukraine.
That said, other parts of the market have offered a more measured read. Lloyd's said it does not expect the Middle East conflict to be a capital event, with chief of market performance Rachel Turk noting the probable maximum loss impact is not anticipated to be material, as the market weighs scenarios of de-escalation, elongation and escalation.
"Wars, the threat of future conflicts and other political violence activities are likely to undermine geopolitical and economic stability in 2026 and for years to come," said Thomas Lillelund, chief executive of Allianz Commercial.
Lillelund added that risk managers need to be "relentlessly forward-looking" in refining resilience strategies as threats emerge from multiple sources.
Allianz Research tracked around 250 strikes, riots and civil commotion (SRCC) events over the past five years involving more than 1,000 participants and lasting longer than a day.
Pakistan recorded the most with 11, followed by Indonesia, with the US, Greece, Tunisia, Hungary, Iran and India also featuring prominently in the data.
Indonesian riots in August generated more than $50mn in insured losses, while Nepal's September protests could surpass the more than $200mn in insured losses from the country's 2015 earthquake.
Robert James, senior PVT underwriter at Allianz Commercial Asia, said unrest in markets such as Indonesia and Nepal, alongside tensions between Pakistan and India and Cambodia and Thailand, has so far had a limited regional market impact due to its localised nature.
He warned, however, that the real risk lies "in the potential for these conflicts to escalate into full-scale wars."
State-linked sabotage and attacks on critical infrastructure, including undersea cables by Advanced Persistent Threat actors, have also risen sharply over the past 18 months, the insurer said.
On mitigation, 49% of companies surveyed are renegotiating and diversifying supply chains, 35% are exploring nearshoring or domestic manufacturing, and 32% are improving inventory management to adapt to shifting geopolitical risks.
