Business Risks Overview

Business risks are as diverse as business models themselves: business interruption, market developments, cyber incidents, natural catastrophes, legal changes, macroeconomic developments, loss of reputation – and the list goes on.

Interrupting a company’s production causes economic loss. Corresponding insurance solutions protect against damage, for example if a company’s production and distribution need to be temporarily halted, due to a breach of applicable manufacturing standards. Major sporting events, the Academy Awards, or international song competitions constitute extraordinary television experiences. However, if there is a technical problem with the live TV broadcast, financial losses are sure to follow, since enormous amounts of money are involved. Claims by advertising partners and sponsors are guaranteed to skyrocket if an event cannot be broadcast due to technical difficulties. Although major broadcast delays are relatively rare nowadays, supplementary policies for event contingency insurance – such as for large concert tours or international sporting events – are more important than ever.

Reputational risk is one of the ten most important global business risks. Demand is growing for insurance against loss of reputation. A company with the right cover has a much better chance of coming through a reputational crisis with the lowest possible financial damage. Even analysing the potential risk scenarios in itself often improves risk management. Cyber attacks cause major financial losses for the company and third parties, can damage reputations, and lead to reduced revenues and profits. Almost no day passes without the media reporting on a cyber attack, and the consequential loss and misuse of corporate data. For many sectors, including the food and textile industries, tourism, luxury articles and cosmetics, hacking poses a threat to reputations and success in business. Reputation protection is therefore one of the most important components of risk management for this reason as well.

Executive decisions that prove faulty or negligent can have dire personal liability implications for managers. As a type of professional indemnity insurance for executives, D&O insurance has evolved from a “negligible” line of business to become an important international market segment. Today, this form of liability insurance is a standard component of corporate risk management strategies. Indeed, the risk of being sued for liability is ubiquitous. And yet managers are often unsure of what exactly the risks are, and what possibilities are available to protect themselves.