Growing global political volatility is a major risk for medical travel

 

Global political volatility is leading to heightened levels of politically-motivated violence and political risk (the definition of which broadly refers to the complications both businesses and governments may face because of “political” decisions)

As much as many in the medical tourism business would like to pretend that they are not affected by what is happening in the real world, they must pay attention to how this volatility can hinder or help their business planning. Why?  Because where people go as medical tourists, or even where people are allowed to go by their government or by airlines, can be affected by political events.

Political volatility has a far reach

Political volatility can have a wide reach. For example, the on-off hot-cold relationships between Russia, Turkey, the US and EU countries has affected where people go in the past and will almost certainly do so again soon. 

In the Middle East, the ongoing problems of Syria have had a knock-on effect to neighbours Jordan, Turkey and Israel. And when you add in the flight paths of airlines, military aircraft and missiles, nearby Cyprus has also seen tourist concerns. 

Even political decisions in ‘stable’ GCC states can influence medical tourism flows - the economic arm wrestling between Qatar and its allies, and a group of countries led by Saudi Arabia, has had a major impact on where Qataris go for medical treatment.

Across the Atlantic, Americans cannot legally go to Cuba for medical treatment as the hoped-for improvement of relations under Obama became a damp squib under Trump.

Politically motivated terror attacks have also had an impact on the numbers of people going to Thailand, Tunisia and Turkey. Interestingly while the impact on tourism for those countries lasted many months, a terror attack on European soil tends to influence inbound flows only for a few weeks, if there is any impact at all.

Media coverage amplifies perceived risk….if it gets picked up

With European and American mainstream media increasingly being narrowly focused and facing challenges from social and new media, what happens in certain countries gets a bigger exposure than others.

Twenty people killed in a bomb attack in Europe for example gets massive coverage, but the same event in Africa can get ignored. Three people dead in a terror attack in France gets a headline, but thirty dying every hour in India in road accidents is no longer newsworthy.

Medical tourism must grasp that it is as much about customer perception as reality. This does not mean that organisations can either ignore events or put out messages about normality (e.g. “we are safe”) when there is a real risk. Customers hate being misled.

An impartial view of political risk, terrorism and political violence

To get an impartial view I turn to insurance broker Aon's annual study on the subject, which they prepare with input from risk, political and economic experts. The insurance industry regards this as the gold standard impartial go to guide.

These Aon 2018 Risk Maps, covering Political Risk, Terrorism and Political Violence, and produced in conjunction with Continuum Economics and The Risk Advisory Group warns that political violence risks are rising globally due to geopolitical tensions, a weakening of liberal democratic governance and the repercussive effects of chronic conflicts around the globe. They conclude:

  • Political Violence. The likelihood of interstate conflict, even involving major powers, is at the highest point since the end of the Cold War. Growing geopolitical competition and weak leadership in international diplomacy have contributed to increased risks of armed conflict
  • Terrorism. The number of terrorist attacks in Western countries in 2017 (204) doubled - up from 96 in 2016, though casualties remained at similar levels. A few war zones internationally continue to serve as incubators for international terrorism, although the global threat from Islamic State seems to be waning
  • Political Risk. 2017 saw political risk increase in 11 countries, with climate change and commodity shocks weakening fiscal positions, which are still struggling to recover from the commodity shock, and exacerbating rising levels of political violence and supply chain disruption
  • 40% of countries are listed as being exposed to terrorism and sabotage risk
  • 60% of countries are exposed to civil unrest risk
  • 33% of countries have a risk of insurrection, war or coup risk
  • 46 countries or territories are now rated as high or severe risk, representing 22% of the global total

Tourism is an attractive target for some terrorists

The Aon map captures the changing elements of political risks for businesses across emerging and frontier markets countries. The persistence and rise of this risk across the globe demonstrates how relevant it is for businesses to identify and monitor specific political risk elements in their countries of operation.

Last year saw political and terrorism risk rising in several countries.  The five countries identified with the highest number of terrorist attacks were Iraq, India, Somalia, Pakistan, and Nigeria, in descending order. 8% of all terrorist incidents in 2017 targeted businesses. 75% of these targeted oil and gas, mining, transport, construction, and critical infrastructure. The rest were directed at retail, media, finance and tourism.

Mark Parker of Aon has this recommendation: "The global geopolitical environment remains volatile. This is reflected in the 2018 risk maps, with the growing interlinked threats posed by political violence and political risks. Given this heightened level of risk, and the rapidly evolving landscape against which businesses are operating, it is essential the companies understand their exposures and the potential for political instability to impact their people, property and supply chains."

The tourism sector must manage the risks posed by increased terrorism, with the sector a highly attractive target for some terrorist organisations. In 2017, there were at least 35 attacks worldwide that directly targeted commercial sectors critical to the tourism industry, such as hotels and resorts, nightclubs, civil aviation and visitor attractions.

A potential game changer for a medical tourism destination

Every week I see yet another report claiming that for a country, a region or globally, medical tourism will grow by 20% or 25 % in every year for the next five or ten years. This optimism is rarely based on any reality.

With our current unstable world, I am reluctant to make predictions for next week, let alone the next decade. These medical tourism growth reports rarely warn about political or natural disasters that can be real, overnight game changers.

Medical tourism businesses and organisations face both threats and opportunities from political volatility. They need to be ready to adapt quickly on damage limitation should stability be under threat in their own country, or potentially take advantage of a rival country's problems to promote the benefits of their own destination.

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