Staying ahead of the storm
Amid a dramatically shifting risk landscape, BELFOR’s CEO Elvir Kolak talks about the importance of getting ahead of a crisis to ensure a rapid recovery
Many risk managers feel they have been in firefighting mode for the last two years, struggling to stay ahead of one crisis after another. Reporting risks is no longer enough. It is critical that risk managers are able to prepare for risks before they happen.
While new risks have emerged in recent years, traditional risks have also increased. In the last five years, insured losses from natural catastrophes have resumed a long-term growth rate of 5% to 7% annually, following a benign phase of lower annual losses in the 2012-2016 period.
Risk managers have also had to deal with a hardening insurance market and all that brings – a rise in premiums and exclusions, and a reduction in capacity and coverage.
One area where the lack of capacity is conspicuous is in business interruption. Not only has coverage declined but the likelihood of long business interruptions has increased. For example, the cost and waiting times for replacing machinery have both increased; the availability of spare parts has declined, as has the number of skilled mechanics and mechanics in general.
And the lack of insurance will itself make recovery from BI much more difficult.
The concerns around BI were evident in the floods that wreaked damage on households and business across Europe in the last 18 months. Belgium was one of the hardest-hit countries from the floods of July 2021. Insurers in the country received more than 71,000 claims accounting for damages in excess of €2.16bn.
In addition to the cost of claims, companies in Belgium have had to cope with the cost of recovery.
The lack of restoration companies, insurers and other service providers was exposed for all to see by the floods, contributing to the commercial trauma experienced by so many small and medium-sized enterprises.
Consequently, the floods also showed why risk managers must try and get ahead of the crisis, and how a solution like BELFOR’s RED ALERT is of critical importance in today’s market.
As one senior risk manager said: “It seems that we are always struggling, always in firefighting mode, always trying not to drown, always in the middle of the storm. We need to prepare for foreseeable challenges and risks before they happen. We need to get ahead of the wave. Only reporting risks is not enough.”
BELFOR’s RED ALERT service is structured to work alongside companies’ response plans and emergency procedures so that recovery can be more rapid and effective, and that any gaps in business continuity plans can be minimised.
- BELFOR covers entire supply chains across all continents.
- RED ALERT® clients receive exclusive access to a dedicated hotline.
- RED ALERT® clients enjoy priority status. In the event of a national disaster and increased demand, RED ALERT® clients skip the line and get served first.
- No two businesses or even industries are alike. This is why BELFOR experts bring in specialist knowledge and experience of all businesses, being able to customise their services before, during and after a business interruption.
- By their nature, emergencies create uncertainty. RED ALERT® supports companies in defining their appropriate level of service, which corresponds to their prevention planning, making their business more resilient.
- The first hours following a disaster are crucial. Step-by-step protocols tailored to the client’s needs reduce the impact of any business interruption. That way, companies are ideally prepared for both minor incidents and worst-case scenarios.
The rise in natural catastrophes and business interruption, the decline in insurance capacity and the need for companies to manage their own risk are all subjects that were discussed at this year’s Ferma Forum in Copenhagen.
Ferma’s 2022 European Risk Management Survey showed that risks such as cyber and supply chain failures have increased rapidly, as has the importance of the risk manager’s role. “Resilience is more than ever a priority for top management and the role of the risk manager is evolving as a result,” said Ferma president Dirk Wegener. “We see risk managers taking on additional responsibilities, particularly for business continuity and crisis management.”