Template - Single Risk 2016

Unstable Regions

Violent conflicts can rip apart regions, countries, communities and families. The impacts of conflict are seen more clearly than ever today, as millions of people are fleeing violence and conflict areas are left in economic and social turmoil. Conflicts and instability put increasing pressure on the world economy, as it has been estimated that conflicts cause a 13 percent loss in the global GDP, an increase of 15 percent compared to 2008 (IEP, 2015).

The World Bank estimates that 1.5 billion people live in countries trapped in repeated cycles of violent conflict. Conflicts have huge impacts on people, societies and economies. After a seven-year civil war, which is the average length of a civil conflict, incomes are around 15 percent lower compared to expected levels. Furthermore, because of the effects of inflation and lost investment opportunities, the incidence of absolute poverty will have increased by 30 percent compared to before the war began (Lopez).

Conflicts can have enormous impact on the state of infrastructure and thereby the affected countries economic prospects. It has been estimated that the ongoing conflict in Syria has resulted in destruction of physical infrastructure amounted to USD 75 billion (World Bank, 2016).

Conflicts often leave the affected areas drained of people and resources, witnessed by the fact that global refugee flows have reached a level that is unprecedented in recent history. Nearly 60 million people, half of them children, have been forced from their homes due to violent conflict, compared to 40 million at the time of World War II (World Humanitarian Summit, 2015). More
than half of these recent refugees come from three conflict-ridden countries: Syria, Afghanistan and Somalia. It is an upward trend: during 2014, the number of people displaced – 42,500 per day – was four times greater than in 2010. As the average length of displacement due to conflict or protracted crises is 17 years, it is a long-term status for many (Ferris, 2014).

Companies operating in conflict areas can rarely remain neutral, as their actions and policies will typically either exacerbate problems or work to mitigate them. On one hand, businesses can act as drivers of conflicts, with special interest in maximising profits at the expense of the region’s socioeconomic health and well-being. Presence of business can also strengthen the existing power structure and thereby prolong conflicts.

However, businesses can also be a force for conflict reduction in fragile states (ECDPM, 2016). It is the private sector’s ability to create responsible business models, while also creating job opportunities, economic growth and social well-being in the community in which they operate that makes this sector interesting to explore in terms of its contribution to creating more peaceful societies.

Beyond loss of life, conflicts and the resulting large displacement of populations have broader implications for the global social, economic, and political landscape, as it is estimated that 13 percent of the global GDP is lost due to conflicts (IEP, 2015).



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