Companies are facing unrelenting operational challenges both at home and abroad in an era of heightened insecurity, political unrest and economic instability.
Be it through terrorism or criminal acts such as corruption, extortion or abduction, these threats are not only impossible to predict but also extremely costly to both a company’s finances and reputation.
- In 2015, a Hong Kong toymaker had the private data of 6.4 million children stolen via cyber-attack.
- According to a Thompson Reuters survey, 94% of participants found that bribery and corruption was the most critical issue and a similar share of respondents found this to be the biggest issue in Asia.(Source: ‘Revealing the true cost of financial crime’- ‘Focus on Asia and the Pacific’ by Thompson Reuters.)
- This year, violent civil commotion, including malicious damage, in Papua New Guinea highlights potential workforce and asset risks for companies who are caught in a conflict between local landowners and the authorities.(Source: Global Risk Bulletin- September 2018 by S-RM)
- The abduction of a Chinese businessman in the Philippines in June 2018 highlighted the continued kidnapping risks faced by expatriates in the country.
In the context of these issues, there is a growing need for companies, particularly their in-house risk management and security teams, to have a sophisticated, pre-emptive and rapid reactive approach to combat any type of security risk which may arise both domestically and overseas. But without a dedicated, fully-fledged global security team in-house, this becomes an impossible task. Therefore, an increasing number of companies of all sizes, sectors and geographies, are relying on third-party security and investigations consultants to provide their expertise.
However, it is important to note the following challenges when working with third parties:
Cost: procurement of a third party consultant, whether on an ad-hoc basis or on a full retainer basis, is extremely costly and the consultant’s expertise may be limited, thereby forcing you to work with several consultants, which further drives up costs.
Time: Time is of the essence in a crisis. If you call upon the services of consultants only as and when a crisis occurs, they will not necessarily be available exclusively for you to use. Any delays in response will have severe repercussions on the victims, business and brand.
With this background, the insurance market reached a critical juncture, recognising the need for a more holistic risk transfer approach to security risk and crisis management. Only a few specialist Security Risk insurers offer - this unique solution, which covers the indemnified services of a globally retained, expert consultant, recommended by them, for a broad suite of insured security events for which they have insurmountable expertise.
The insured security events include:
- Criminal Risks (e.g. bribery, murder, criminal facilitation, product tampering, workplace violence)
- Information and Cyber Risks (e.g. cyber extortion, cyber threat, network compromise, data breach)
- Catastrophe Risks (e.g. environmental disaster, man-made disaster, epidemic and natural disaster)
- Political Risks (e.g. confiscation, expropriation, illegal seizure, occupation)
- Political Violence and Terrorism Risks (e.g. civil commotion, civil war, malicious damage, riots, strikes)
- Kidnap, Detention and Extortion Risks (abduction, blackmail, missing person, hostage crisis)
Arguably, the most important and unique element to this new coverage is the “triggers” for when the cover can be activated. You can call the security consultants:
On suspicion that a security event is about to occur
On imminent threat of a security event
When the event actually occurs
The all-encompassing services of this consultancy firm are accessible 24/7/365, supporting you in managing the event with all of your relevant stakeholders but also providing post-event support services for future-proofing your business against similar incidents and providing critical victim/witness support and de-briefing.
The key benefits to this holistic support:
- Mitigation of potential litigation from staff
- Evidencing important due of care obligations to your workforce
- Brand and reputational protection
- Balance sheet protection
- Business continuity enforcement
- Operational resilience
- Reduction in claims on your other more costly insurance
These more holistic crisis and risk management products were developed in response to the market’s needs. Its unique ability to be “triggered” before an incident occurs will enable you to respond effectively should a crisis strike. It is, therefore, a product with many relevant benefits for businesses looking to manage their security risks.
Read the second of our 4-part series here.
For more information, please contact Lucy Bradshaw at Lucy_Bradshaw@jltgroup.com.