Global supply risks

How Vulnerable Is Your Business to the Rising Risk of Ethnic Violence?

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Every country in the world experiences some degree of social tension – so how should you incorporate this type of risk in your overall risk management program? How much weightage should be assigned to risks related to social tensions such as ethnic violence? This blog explores several recent examples of ethnic tensions and offers practical guidance to mitigate the possible impacts of this risk to your business.

Last month, the Jat community’s reservation agitation in North India turned extremely violent, shutting down many essential services to the state of Haryana, where Gurgaon is a major IT-BPO hub. The protestors demanded the inclusion of their caste under the Other Backward Class (OBC) category, which grants increased access to government jobs and educational openings. They burned buses and buildings, blocked major highways and train routes, and attacked houses of politicians. There are also reports that allege how vehicles were stopped on the highways by goons and many women commuters were gang-raped. The violence also affected India’s capital, Delhi, with the government shutting down all its offices and schools. Many industries were also affected including Maruti Suzuki India Ltd., India’s biggest carmaker by sales. The company was forced to suspend operations at its auto plants in the region due to disruption in supply of certain manufacturing components. Damages incurred – 19 people dead, 200 injured, and US$ 5.1 billion business loss.

Interestingly, latest records by the Delhi police also reveal that crimes against people from North-East India have risen by about 232.58% over the last two years in the city. However, such violence is not just limited to the northern part of the country. Over the last few years, even other major cities like Mumbai, Pune, Bangalore, Chennai, and Hyderabad have also been witness to such incidents. In August 2012, thousands of people of North-Eastern descent fled these cities after rumors of threat to their lives in reprisal to the ethnic clashes in the State of Assam. Bangalore witnessed a mass exodus of 30,000 people, including many students and BPO workers.

Now if we thought such clashes and issues were limited to a huge, multi-cultural, multi-religious, and diverse country like India, take notice of the ongoing fight by religious rebels in Southern Philippines. Also known as the Mindanao conflict, this is considered to be among the oldest ethnic internal conflicts in the world which has had both political and economic repercussions for the country.

Ethnic tensions in China are also said to be on the rise, with several episodes of intense violence among the Tibetans and Uighurs.

And who has not heard of the Israel-Palestine conflict? This age-old issue continues with the same vigor despite multiple attempts at peace and reconciliation. The threat perception is so high that Jerusalem is often ranked among the riskiest outsourcing hubs in the world. In December 2015, the US and UK issued travel warnings to their citizens stating heightened tension and security risk in Jerusalem, Tel Aviv, and Haifa on account of frequent Palestinian terror attacks.

Among the popular Latin American outsourcing hubs, Colombia has a history of dealing with the issue of rebels, especially the FARC (Revolutionary Armed Forces of Colombia) and the ELN (National Liberation Army). The conflict with these groups has led to the loss of thousands of lives till date along with attacks on critical infrastructure resulting in huge losses.

Not to forget Africa, where ethnic tensions have been a major reason for conflicts. Almost every country in this continent has been a victim of ethnic violence at some point creating perceptions of insecurity, one of the many reasons why outsourcing to Africa got slightly delayed.

Every country in the world has some degree of diversity that results in people belonging to different political groups, castes, religions, etc. This diversity has the potential to lead to ethnic tensions and/or violence, and it’s important for global businesses to define their risk tolerance and proactively monitor for this type of risk. It is only wise not to venture in to a war zone. But it is also important to ensure that even risks that don’t pose an immediate threat are not overlooked only to be dealt with when disaster strikes. It is vital to stay well-prepared to deal with any known risk, especially those involving people and security, which have the potential to slow a business down, or suspend it temporarily, or in the worst case scenario, shut it down permanently. Anticipating such risks and tracking them actively is highly essential.

In places where violence is common or has the potential to erupt easily, businesses need to have a robust plan and budget for prevention and mitigation. Problems of commute to the workplace are commonly reported, for which a remote-login process may be deployed, especially for time-bound, high-importance processes that cannot be compromised. Always have back-ups for such critical processes. In case of a situation where employees are stranded within the office premises, arrangements must be made for their safety. It’s best to prepare ahead of time through proper planning and drills to ensure that infrastructure and premise security are properly staffed with enough personnel and equipment. Training must be imparted to people to step-up and help co-workers traumatized by the incident. In addition to physical safety, it is also important to account for the concealed impact of violence-related anxiety on relationships in the workplace. Regular sensitivity workshops, open discussions, and fun outings are effective ways to ease tension and build stronger relationships. Violence prevention and redressal can also be incorporated into a company’ corporate social responsibility program with better involvement in local peace organizations, community development initiatives, etc.

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