Everyday risk and black swans share platform at Sirm meeting

In his presentation, ‘Success and failure—an example’, Daniel Halter, Risk and Insurance Manager at airline catering firm Gategroup, explained how his company dealt with pandemic risks such as Sars and the swine flu. “When the Sars pandemic broke out and World Health Organisation experts drew similarly bleak scenarios about other pandemics that were to come, we decided to work out a special emergency plan for all levels of the group,” Mr Halter said.

One of the main questions was how to deal with a situation in which a large number of employees cannot come to work. Another was the consequence for the company when customers no longer wish to fly. “There are always two scenarios,” the risk manager said. “Either the company has business but no employees, or it has employees but no business.” Both scenarios have to be thought through in advance, he said.

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Gategroup’s plan included an emergency brochure with checklists for its managers. The brochure contained such questions as: What can I do in the event of a pandemic? Can I send my employees on forced leave? Does the company have alternative suppliers to fill any loss of supply? “We also had to prepare for the scenario that electricity is turned off by the authorities as it is needed for hospitals,” said Mr Halter.

The company tested this emergency plan out in different cultural settings. It was put through its paces in Bogotá, Colombia; Shanghai and Zurich. The plan was tested in the field when Mexican swine flu broke out in 2009. “In this case we found out that we didn’t have enough protecting masks and disinfectants,” Mr Halter said.

Cern’s Mr Stampfli has to deal with different risks to those at Gategroup. Cern operates large data handling programmes and therefore cyberspace threats are quite significant.

One of the main prevention challenges is to localise these risks, Mr Stampfli said. “As a research organisation we face the problem that information technology programmes might be disturbed and paralysed.

“The most important part is prevention and security measures that cannot be covered by insurance,” he said. The same is true for risks such as kidnapping & ransom, he added. “Here assistance services such as logistical aid and help in negotiations with the kidnappers in a discrete way is more important than insurance.”

He bemoaned the fact that Switzerland’s large insurers do not meet companies’ individual needs. “There are insurers that use strict directives and underwriting lines and they do not want to adapt to the special needs of an organisation like ours,” he said, adding that this is unacceptable.

“This behaviour had nothing to do with capacity, as there is plenty of capacity,” he said.

For him, prevention and risk management is not only necessary to fulfil legal directives laid down by the government or other authorities. It has financial and other corporate benefits, such as cheaper insurance coverage, he said.

“If the company has no prevention strategy the insurer will take over this job—with stricter terms and conditions, higher premiums and exclusions,” he said. “In addition, the insurer evaluates risks in a way that may be inappropriate.” This is why prevention is in the interests of every company, he concluded.