Social changes and cyber threats create new risks for Portuguese firms – Portugal

“The emerging risks that concern us most today are those linked to civil liability, as a result of social and legal changes,” said Demetrio Tahoces, Director of Insurable Risks at energy group EDP. “For example, when it comes to environmental liability society is becoming increasingly sensitive and demanding on issues like the levels of pollution caused by large industrial firms. Companies have had to adapt themselves continually, and we have made big investments towards that goal,” he pointed out. Mr Tahoces also stressed that the same phenomenon has increased the risk companies face when services they supply are disrupted, even if caused by factors out of their control. “The media repercussion is huge and we are expected to take responsibility for the disruption even when we are merely passive actors in such events,” he said.hidePublic opinion also has the capacity to influence the way authorities interpret the responsibility of businesses. “As social demands change there is always a risk that regulators adopt the view that they need to become more conservative and demanding towards what they see as the responsibilities of companies,” Mr Tahoces said. For his part, Pedro Nazaré, Head of Risk Management at rail firm Refer, expressed concern over the offer of liability insurance in the Portuguese market today. A lack of transparency among suppliers only adds to the difficulty of purchasing such cover, he added. “The lack of consistency in liability insurance concerns me,” he said. “I understand that this is a very dynamic area and liability policies today are different than others present in the market years ago. But we cannot lose sight of the fact that there must be some kind of standardisation and homogeneity of concepts in the market.” Risk managers also voiced their concern over the scarcity of satisfactory insurance coverages for a host of emerging risks. José Luis Amorim, Director of Risk Management at the Sonae group, noted that cyber risks are one of the main threats faced by his company today. But it is an area where a good insurance policy is most difficult to come by, he said. “The insurance sector does not like to deal with the unknown, which is a natural reaction, but the fact is that risk is uncertainty,” Mr Amorim said. “In general it has been very hard to find in the international insurance market the right coverages for cyber risks. We are very active looking for solutions in areas like client data protection, but the market has been unable to present us with satisfactory coverages.” Mr Amorim has had first hand experience of cyber risk. The website of a loyalty card scheme belonging to his group was attacked by hackers earlier this year. “Fortunately repercussions were almost none as we had previously identified the risk and were working on solutions, some of which were already up and running, while others had to be accelerated,” he said. The attack has only highlighted how desirable adequate transfer solutions are. “The potential for losses is huge,” Mr Amorim said. “Our loyalty card has three million users.” He noted that in order to mitigate cyber risks, Sonae has invested heavily in boosting security measures. “We had recently invested a lot of money in IT security, completely overhauling our systems and preparing them for eventual attacks,” Mr Amorim said. “In fact, the site of our loyalty card that was attacked was actually managed by a financial services partner and one of the ways we found to solve the problem was to bring the site within our own internal security system, which proved to be safer. Investments in IT security do pay off.” Another emerging and growing risk that worries Mr Amorim involves the disruption of supply chains. “Supply chain risk has been a focus for several years already and we have increasingly been working on its mitigation,” he said. “Insurance coverages remain too focused on physical damage, but that is not always the case,” he said. “There are sometimes problems with the quality of products, for example, and there are no takers for this risk when we try to transfer it to the market. We would also like the insurance business to be more innovative in the segment of business interruption. Challenges in this area have been changing very quickly, and insurers are not adapting coverages at the same pace.” “The market struggles to offer coverages for new risks,” Mr Tahoces agreed. “When a risk is not standardised we find it very difficult to find coverages, and when we find them prices are often too high,” he concluded.

Social changes and cyber threats create new risks for Portuguese firms – Portugal

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