The death of a protester on 8 November 2019 will herald a rise in violence in the coming days in Hong Kong, with the use of petrol bombs and other weapons in street rioting, vandalism of business premises, and violent attacks on prominent individuals. The overall situation thus remains “events driven”, and subject to escalation, notwithstanding a fall in protester numbers.

The Protests

Recent events have highlighted how the unrest has changed in nature, with demonstrator numbers falling, violence rising, and pop up demonstrations spreading across Hong Kong.

Hong Kong’s society is deeply polarised, with many people angry at the violence and disruption, but with others supportive, including some doctors, medical staff, various churches and others who offer tacit, practical support to the demonstrators.

The Police

The Police find themselves in an invidious situation, with a very effective public relations campaign arrayed against them. The intensity of the violence is adding to pressure to act, and the Police are frequently taking more forceful measures.

Tactical support from Beijing may follow, in the form of technical aid aimed at disrupting protester communications, or in the deployment of other capabilities in an effort to identify and neutralise ringleaders. Over time, such measures will weaken the protest movement.

A pressing problem is that officers are tired and overburdened – and so at risk of breaches of discipline. The Police have acted professionally on the whole, barring some notable errors, conscious that missteps only inflame matters.

Mainland China’s stance

Vice Premier Han Zheng, who has responsibility for the autonomous region, on 6 November 2019 endorsed Carrie Lam, and firmly denounced demands for Hong Kong’s independence.

Beijing could yet implement new security measures, perhaps through the Hong Kong Emergency Powers Ordinance, or even under Annex 3 of the Basic Law, on central government fiat.

As likely, though, is that the Chinese authorities will resort to a less overt approach, exerting control through United Front organisations, relying on the Hong Kong Police, and making use of other means of influence.

Key indicators of Increasing Violence

Certain upcoming events may yet inflame matters, such as:

• The death of an injured student on 8 November 2019 will revive the demonstrations, and feed into the hysteria amplified by social media.
• Attacks on district council electoral candidates, such as that on Andrew Chiu Ka-yin, a pan-democrat who had his ear bitten off, and that on Junius Ho Kwan-yiu, a controversial figure stabbed on 6 November, raise fears of the polls’ deferral. Any delays however will only provoke protests in defence of Hong Kong’s “most democratic” elections.
• The judiciary may become the focus of tensions. Magistrates and judges who hand out custodial sentences to protesters, as seems inevitable, may face “doxxing”, or become direct targets of protests themselves. This situation will add to complications arising from recent blunders by the Department of Justice.
• Demands from Beijing that the Hong Kong government and judiciary work more closely in concert could turn the question of the courts independence into a further cause around which demonstrators can rally.

The Risks to Business

The risks to businesses in Hong Kong have thus escalated. The territory-wide unrest is not dissipating, and remains driven by events. Violence will intensify in the days ahead, even if demonstrator numbers diminish, with attacks against politicians, partisan businesses, and the police liable to occur.

In this context, companies must re-evaluate the safety of staff members, the risks of damage to plant and property, and the potential denial of access to office premises. The targeting of key transport infrastructure, especially the MTR, will once again disrupt activities.

A further concern is that both sides in the contest are demanding that businesses make clear their allegiance – “yellow” or “blue”. In such a context, companies can inadvertently trigger criticism, vandalism, or even arson attacks.

Efforts by the Hong Kong government to impede protesters’ lines of communication could have unintended consequences that hinder businesses’ day to day operations.

In the longer term, the movement seems likely to fail. Even as it weakens, though, it may become more aggressive, geared towards small, if angry, protests, violent attacks, and even more extreme acts, such as bombings.

The economy will suffer in the interim, particularly sectors such as leisure and tourism. However, the reality is that the banks and financial institutions that underpin Hong Kong’s success have continued operations, and should do so in the weeks and months ahead.

What to Do

Businesses must react to this situation. Key actions to mitigate risk might include:

• Re-assessment of contingency plans to take account of the rising physical threat.
• Establishment of plans to deal with sudden transport disruptions.
• Development of redundancy within existing communications systems.
• Large companies that rely heavily on operations in Hong Kong may wish to disperse certain capabilities around the region.
• Tighter management of social media and advertising activities, so as to limit the prospect of inadvertently provoking a boycott, or even attacks on premises.

SVA (www.stevevickersassociates.com) is a specialist risk mitigation, corporate intelligence and risk consulting company. The firm serves financial institutions, private equity funds, corporations, high net-worth individuals and insurance companies and underwriters around the world.

SVA has a dedicated crisis management team which, for our retained clients, stands ready to assist companies during crisis situations. Retained clients pay an annual fee for a 24-hour response capability.

SVA is based in Hong Kong and is the only firm with the local and senior expertise drawn from Intelligence, Operations and research functions of the former Royal Hong Kong Police Force.