CAHRAs 101: An introduction to identifying Conflict-Affected and High-Risk Areas for companies and investors
ALL
Recent escalating tensions and hostilities, including in Ukraine, Sudan, and across the Middle East, highlight a broader reality: armed conflict, protracted violence, and violations of human rights and international humanitarian law (IHL) have become enduring features of the contemporary geopolitical landscape.
Today, corporate and investment governance frameworks increasingly refer to conflict-affected and high-risk areas (CAHRAs), yet in most cases these contexts are treated like any other jurisdiction from a due diligence perspective. In practice, determining whether a company operates in a CAHRA is not a descriptive exercise but an ongoing legal and risk assessment that shapes due diligence processes, informs governance escalation, and may determine the applicability of distinct bodies of international law. Despite the growing prominence of this concept, CAHRAs remain frequently misunderstood or misidentified – confused with political designations, conflated with sanctions regimes, treated as static country-wide classifications, or determined solely by reference to fixed lists that may be either too narrow or too broad.
Accurate CAHRA identification is critical for companies and investors, not least because misclassification can have serious consequences. Under-identification can expose businesses to heightened human rights abuses, IHL violations, and the risk of causing, exacerbating or sustaining conflict (“conflict risks”). Over-identification, by contrast, can lead to unnecessary disengagement, distorted investment decisions, and the premature withdrawal from commercial activities that might otherwise be conducted responsibly.
This brief examines how CAHRAs should be defined, identified, and understood within corporate and investment governance frameworks. It addresses four central questions:
- What is a conflict-affected or high-risk area?
- What are the risks or consequences associated with doing business, or investing, in a conflict-affected area?
- Which sources and methodologies can companies and investors rely on to identify a CAHRA?
- What should companies and investors do once they have identified business activities in and/or portfolio exposure to a CAHRA?
