Reputation and supply chain shoot up c-suite agenda

Reputation is the fastest growing risk category on the c-suite agenda as intangible threats continue their seemingly inexorable rise and shove traditional physical assets into the background, according to latest research among 1,500 senior executives with multinationals active in Europe carried out by insurer CNA Hardy. Reputation risk is striding up the agenda on the back of wider economic trends such as the increased interconnectivity of the global economy, ever greater reliance on technology and more vulnerable supply chains. Closely linked economic and political uncertainty, notably in Europe because of Brexit and North America because of coming elections, is hammering business confidence in these economic blocks. Asian business leaders are far more confident than their peers in North America and Europe based on CNA Hardy’s research. But they are also becoming increasingly nervous about supply chain risk that has suddenly arrived on the risk register in the region and now only sits behind economic, technology and cyber in the league table, report the London-based specialty arm of US insurer CNA. The fast-evolving risk landscape in Europe and worldwide presents the insurance community with a serious challenge to come up with innovative new solutions that will increasingly be a blend of risk transfer and prevention, mitigation and management services. Insurers and brokers need to work out optimal models for customers and who are the best partners to work with, Dave Brosnan, CEO at CNA Hardy told Commercial Risk Europe. “In the past, insurers were called on to protect tangible assets…while that’s still very much the case, globalisation and the rise of the tech-enabled information economy means insurance is also being called upon to protect more tangible things like cyber and data risk, trading relationships, supply chains, digital assets, intellectual property and reputation,” said Mr Brosnan. “As tangible and intangible risks proliferate, insurers, brokers and risk managers will need to work ever more closely together to build appropriate resilience into business systems, processes and assets if we are to navigate the new tangled web of interconnected risk that increasing reliance on global trade and technology brings,” he added. The risk and insurance market has talked about delivering robust and cost-effective cover for reputation and supply chain risk for some time now but with limited success. Mr Brosnan said the challenges will have to be overcome because of demand in the boardroom. Insurers and brokers simply need to deliver the goods, he added. The insurer pointed out that currently only 16% of some vital intangible risks such as brand and intellectual property are covered by insurance, whereas some 60% of traditional tangible assets are covered. According to a study carried out by Aon and the Ponemon Institute published this year, intangible assets incurred an average potential loss of $1.08bn and tangible assets $795m. Mr Brosnan said that he is finding “significant appetite” among brokers and insureds for deeper discussion and insight into the drivers of boardroom risk and strategies for risk prevention and mitigation. “In the same way that the market has found a way to model the cost of non-physical damage business interruption claims as part of terror and political violence cover, we believe that there will be appetite to model and mitigate the cost of managing reputation risk and the damage to brand value caused by specific triggers,” he predicted.

Reputation and supply chain shoot up c-suite agenda

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