Lloyd’s says increased concern over terrorism and political violence risk is causing businesses to avoid investing in politically sensitive areas or locating offices in large cities.

More than a third of companies avoid investing in overseas markets for fear of political violence, and 20% have forgone promising business opportunities for the same reason, according to the Lloyd’s report “Under attack: global business and the threat of political violence”.

Lloyd’s Chairman Lord Levene says businesses need to understand their risks better. “There is a large gap between what businesses perceive as a threat and the reality. Many companies are changing their plans based on perceived threats, which is a problem if their information is incorrect.”

Despite terrorism and political violence risks hampering business expansion and investment plans, more than 37% of companies surveyed – and half of smaller businesses – reported they have no continuity plan or one that does not adequately take account of political violence risks.

“Boards are spending an increasing amount of time discussing the associated risks, but it is imperative that they use the right information sources to understand the true threats,” Lord Levene said.