Presented on Friday 5th April 2019.
Recent catastrophic events coupled with local industrial losses has significantly changed the insurance industry. Insurers appetite to underwrite Food and Beverage and Manufacturing exposures in particular has reduced dramatically. This change has led to increased premiums and in some instances, businesses being classified as ‘un-insurable’.
Managing this change in appetite can often come down to how you differentiate your risk and resilience strategies, at renewal. To assist organisations prepare for its next renewal, the Insurance & Business Continuity Lifecycle webinar discussed:
1. The current state of the Insurance Market
2. The key ingredients of Business Continuity Management program
3. The critical success factors in promoting your organisation’s Business Continuity and Resilience strategies for optimal insurance renewal outcomes.
Here are some Q&As that were raised during the webinar:
Directors & Officers insurance has seen massive premium increases – is BCP relevant to underwriters of this risk also?
Definitely. Directors’ fiduciary duties include ensuring the organisation is an ongoing concern; this includes gaining a level of comfort that the organisation can bounce back if there’s a disruption. Directors will be held responsible if their organisation is savaged by an event that could have been managed through robust BCPs.
The other key aspect of a strong Business Continuity Program is the conversations that it starts at all levels. Through good Business Impact Analysis a business can determine the processes that are being undertaken and how the business is operating. Further, Directors can then determine what the disruptive tolerance thresholds of their subordinates and dictate what they should be.
The related crisis management aspect is also of interest. Directors who have had media / comms training are less likely to comment inappropriately or increase the liability for the organisation when crises occur.
Would you advocate that brokers get involved in scenario testing of their clients?
Brokers need to be the advocate of an organisation in a renewal therefore the broking process can be informed by the types of scenario exercises an organisation has undertaken, so the broker should look at exercise reports. This will give an insight into the human dimension of a BC response and allow the broker to represent an organisation true resilience position to the Insurer.
Is it Business Continuity Plans or Crisis Management plans that we need?
They are complementary and both very important. CMPs help an organisation manage the strategic aspect, and in particular, to reduce the reputational (long term) impact of a crisis. A BCP is critical under circumstances where there is a material disruption to an organisation’s most important products and services. The fundamental purpose of the BCP is to reduce the impact of a disruptive event, including the financial impact. It is so critical for an organisation to be able to respond at at tactical, operational and strategic levels.
Do you have any good case studies of how an organisation has evidenced their BCM capability to an insurer, and what the outcome was?
We can’t name names, but a specialised industrial firm RiskLogic is supporting with at the moment have been directed to build BCPs by their insurer before they will be granted cover for business interruption.
What advice would you give, when the Board/Management don’t have any interest in BCP/Crisis Mgt? How do you get them to pay attention to the importance of these plans?
Build a business case by identifying the consequences of inaction from historical or recent cases, covering all the key disruption types for your own organisation.
Hold regular Resilience management sessions in Leadership Team meetings and build a network of influential individuals in the organisation who understand the benefits of Business Continuity and building organisational resilience.
Create a resilience checklist/audit for the board and highlight any gaps. Also describe how the board can help during a crisis, support from a distance and acting as sounding board for the Crisis Manager/CEO
Director - Growth Strategies | RiskLogic
Regional Manager | RiskLogic
Client Director - National Practice Leader | AON Risk Solutions