Unless you’re prioritising ongoing monitoring of a specific country, it can be tough to evaluate the risk of a crisis happening and even tougher to give it a timeline. We examine three unexpected countries where multiple crisis risks are converging – and how Dragonfly’s crisis risk ratings can tell you what data feeds can’t.
It’s likely you’ve heard about Sri Lanka’s escalating medical items shortage and read about ambulances being set on fire amid violent unrest in Pakistan. And perhaps you’ve been following coverage of currency devaluations and rolling power cuts in South Africa.
So you are probably aware of the stability challenges in each of these countries.
But what if one of them was hit by a severe flood? Could you easily assess how these intersecting crises might exacerbate operational and security risks – and articulate this to senior decision-makers?
Even for some of the best corporate security teams, the answer is “no”. Even when you have the capacity to track events on the ground, it’s a Herculean task to make sense of what dozens of smaller indicators might add up to, and how they combine to affect the overall threat landscape.
So how can you quickly and easily assess the risk of a crisis in the countries in which you have an interest?
Why even large crises can be difficult to forecast
Crises come in all shapes and sizes. They can be internal (the civil war in Sudan; military coup in Myanmar) or external (a million people fleeing from Syria to Lebanon). They can be political, economic, geophysical, humanitarian, terrorism or health-related, and more. They can stem from a single big event or several small developments compounding into a crisis.
And they can be difficult to forecast.
First, the ground truths that you receive from local security teams that are so helpful for other aspects of your work are not necessarily useful here. Many crisis indicators are not sudden events but an accumulation of issues and problems, where risk variables creep in so gradually that people adapt their lives around them. Yet, to make proper judgement calls, you need the 10,000-foot view, free of the regional scrimmages that can colour local commentator reports.
Second, the impacts of a crisis are what matters for corporate security, and these will depend on the state’s ability to respond. A country like the US with its robust infrastructure and deep pockets can withstand shocks more easily than a country with weaker institutions. Have you included underlying governance conditions in your country and city risk assessments?
Third, there are few contained problems – shocks felt in one country can reverberate across the world. Companies with global supply lines and international trade ignore this interconnectedness at their peril. No matter where you do business, it’s important to have all countries on your radar. How are you managing to keep track of places which you can’t, for practical reasons, be monitoring all the time?
Three countries at risk of crisis
For all the reasons above, crises can take even the most seasoned corporate security teams by surprise. Here, for example, are three countries that might not set off alarm bells but which we, here at Dragonfly, assess to be at risk of a crisis.
Sri Lanka: Corruption and Civil Unrest
Crisis Level 4 on our SIAS platform (“high”): “There is a likely to highly-likely probability of a potentially high impact (acute) crisis occurring within the immediate term. Or an acute crisis has recently stabilised.”
Power cuts, soaring inflation and the worst economic crisis since independence battered Sri Lanka in 2022. The country ran out of foreign-exchange reserves for imports of essential items like fuel and medicine, pushing the cost of living to record highs and triggering violent nationwide protests which overthrew the Rajapaksa government. Seemingly overnight, corporate security teams were faced with difficult decisions around the evacuation of staff, people movements and beefing up security on the ground.
A recent IMF bailout has stabilised the economy somewhat, and in August 2022 we dropped our crisis risk level from 5 (severe) to 4 (high), suggesting a likely to highly-likely probability of a potentially high-impact crisis occurring within the immediate term. The political situation remains febrile; a return to frontline politics by any member of the Rajapaksa family would likely trigger another bout of civil unrest. We assess that there is a more than even chance of this happening (55%) ahead of the presidential election, scheduled for 2024.
Pakistan: Sharp Deterioration in Political Stability
Crisis Level 5 on our SIAS platform (“Severe”): “A high impact (acute) crisis is highly likely and potentially imminent or is beginning to unfold. Or an acute crisis appears to be stabilising.”
Crisis risk is influenced by the foibles of leaders, economic mismanagement, frequent terrorist attacks and the rise of popular movements. On top of that, Pakistan experienced unprecedented flooding – a “monsoon on steroids” – last year. Even bailouts are unlikely to be enough to shield the country from a rapid economic decline.
Pakistan currently has a crisis level of 5 (Severe), indicating that a high-impact crisis is very likely to occur with little or no notice in the run-up to October’s general election. With high levels of unemployment, a spiralling cost-of-living crisis and politics dominating the agenda, civil unrest is likely, posing significant operational risks for businesses in the region.
South Africa: Slow Erosion of State Infrastructure.
Crisis Level 3 in our SIAS platform (“moderate”): “There is a reasonably-likely to likely probability of a potentially high impact (acute) crisis occurring within the immediate term.”
We assess that South Africa has a moderate crisis risk level (3 on our six-point scale). Unlike Sri Lanka, it’s a slow-moving crisis. Although it is the second largest economy on the continent, it is a country that’s dominated by low growth and signs of capital flight, though not yet at alarming proportions; political factions and patronage networks maintain the status quo. There’s little political ability or will to bring about the structural reforms that are needed for growth and jobs.
While these risk indicators might seem run-of-the-mill, South Africa could be one incident away from a great unravelling. Strains on the electricity grid are currently being managed but, if a grid collapse coincides with a second event like another impeachment process, unrest is liable to snowball. Only this time, the deteriorating organs of the state may not be able to contain it.
Crisis Risk Ratings: Putting the Puzzle Pieces Together
For overstretched security teams, the crisis risk ratings referenced above provide a comprehensive, consistent way to assess which countries are at risk of crisis – and to what extent.
We objectively measure the many intersecting risk indicators at any time by fusing official data and international agency information with ground-level reporting and historical information about how well states have responded to crises in the past.
Then we piece the disparate factors together into a holistic rating that reflects our assessment of each country’s crisis risk.
Risk levels are phased 1 through 6, where 1 is a negligible likelihood of an acute crisis occurring in the medium term and 6 is where a high-impact crisis is underway or unfolding rapidly. Your team can see at a glance exactly where the pressure points may lie.
Crisis risk ratings are available for almost every country and you can access them as maps (zoom into any country to see its current crisis level) and as downloadable tables on our Security Intelligence and Analysis Service (SIAS) subscriber platform. There are also more than 20 other risk ratings on our system, from civil conflict and climatic risk to cyber threat exposure, infrastructure risk, LGBTQ+ discrimination and more.
For deeper dives into the issues in a specific country, our Country Dossiers collate all the intelligence in one convenient place.
Besides the obvious benefit of getting an advance warning that a country is deteriorating, crisis risk ratings can help you:
- Monitor events as they unfold. We not only forecast the probability of an acute crisis happening, but we also give it a time frame for how soon it is likely to happen – not just if, but when. Everything’s updated frequently and we advise you of significant changes, making it easy to activate plans and contingencies when we raise the level or adjust the timelines.
- Justify decisions. Each crisis risk level is carefully determined against a transparent set of criteria and designed to fit into the various phases of a typical strategic response plan. You know exactly what indicators we’ve used to determine a risk level and can explain them to stakeholders. By consulting risk ratings that are underpinned by clear methodology and applied equally to every country with no bias, you can make more confident and consistent decisions, knowing that the risk was carefully assessed.
- Be a lifesaver and business enabler, not a cost centre: Crises are low-frequency but high-impact events that invariably involve the board and senior decision-makers. Being able to answer questions about evolving situations is key – our crisis risk ratings ensure you’re not sailing blind. It’s an opportunity to demonstrate your value in crises by taking the lead on business responses, helping the smooth running of the business instead of hindering it. Given the high stakes of crisis, no organisation should forgo this crucial tool.
Would you like to take a closer look at Dragonfly’s risk ratings, including our Crisis Risk ratings? Contact our specialists today for more information and for a 1-to-1 demonstration of our SIAS platform.
Image: Policemen stand guard during a demonstration by the university students in Colombo, Sri Lanka, on 18 August 2022. Photo by Ishara S. Kodikara/AFP via Getty Images.
