BUSINESS RISKS
Business Interruption has always been a huge risk , but this year it has become even more important .
• FIRE The danger of fire or explosion has not changed and it likely won ’ t anytime soon . With fewer employees in office buildings , however , it is important to remain vigilant and proactive with regard to fire . It is important not to let these exposures slip from the mind when shown side by side with all of the other pandemic-related issues .
• CLIMATE CHANGE Record heat has been seen over the last few years , but it is important to keep in mind that climate change is a slow process and not a fast one . Even so , it contributes to issues such as natural disasters by contributing to the frequency of catastrophic events .
• MACROECONOMIC CHANGES This includes monetary policy , risks of inflation or deflation , austerity programs , and changes in the price of commodities . Interest rates are likely to stay low for a long time in the United States and probably even longer in other countries . What the US Federal Reserve System does in the next couple of years is likely to trigger other world banks to follow suit .
• POLITICAL RISKS AND VIOLENCE
Across the world , protests and riots have quickly begun to overtake terrorism as a primary source of political risk . Antilockdown demonstrations , politically motivated riots , and race riots have all been seen and all caused irreparable damage to cities across the world , destroying many businesses and the livelihoods of their employees in their wake .
• PANDEMIC OUTBREAK The pandemic itself and the potential for future pandemics is one of the biggest exposures of the coming year . That should come as no surprise . COVID-19 changed so many things so quickly that the majority of the world was caught unawares and , even a year removed from its start , many countries are still struggling to get a grasp of it and stop the spread .
• CYBER INCIDENTS Even before COVID-19 existed , many businesses were already becoming more dependent on technology and nonphysical assets for their operations . With COVID-19 , however , the rate of change has been dramatically accelerated . Everyone is quickly adopting new technology and telework procedures and becoming even more reliant on Software as a Service ( SaaS ) and cloud assets to manage things . With these , though , the risk of supply chain partners going down and the risk of security incidents flows downstream , compounding the issues that already exist .
• BUSINESS INTERRUPTION Business Interruption has always been a huge risk but the pandemic has brought it to the forefront . Disruption due to physical damage has always been a concern , but now there are increasing numbers of non-physical risks such as a pandemic , cyber issues , disruption in supply chains , political risks , and infrastructure ( such as blackouts ).
The “ best ,” as always , was saved for last . If 2020 has shown us anything , it is just how devastating a pandemic can be not only for the physical health of people but also for the businesses they rely on and work in . With increasing usage of telecommunications tools , rapidly changing security procedures , and the ability to work from noncompany-owned electronic devices ( personal , in other words ), the risk for cyber incidents is ever increasing . Many business owners are left in the dark after having to shut down due to political action resulting from the pandemic . Are these companies covered ? Does Business Interruption apply to their situations ? The answer , unfortunately , is : It depends .
To manage these growing global risks and for business perpetuation , it is critical for businesses to prepare for a broader range of business disruption triggers and extreme events than in past . +
BY : GWENYTH P . LUU , CLCS DIRECTOR - COMMERCIAL LINES JGS INSURANCE
Gwenyth Luu helps organizations improve their bottom line and lower their total cost of risk by implementing the JGS Proactive Service Platform . The JGS Proactive Service Platform is an inclusive strategy that focuses on primary cost drivers of a risk management program . Gwenyth helps businesses understand all of their potential and actual costs and liabilities , execute an actionable strategy , and deliver superior client service and support . The JGS Proactive Service Platform is driven by continuous strategy and service delivered on a daily basis throughout the year . The service platform includes risk control strategies , claims advocacy and management , contract reviews and insurance program design reviews .
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