New Zealand businesses are not as prepared as they should be when it comes to dealing with emerging risks, a new survey shows.
Marsh’s seventh survey of risk, conducted in September across a range of Kiwi organisations, showed that the top five emerging risks for businesspeople were cyber, increasing corporate governance requirements, talent attraction and retention, earnings volatility and business continuity.
When asked if they had plans in place to deal with these risks, 23% of the clients surveyed said that they did not have a procedure in place to deal with cyber risk, 43% did not have plans in place to deal with increasing corporate governance requirements and 44% were similarly placed when it came to talent attraction and retention risks.
“It is part of our responsibility as risk and insurance professionals to help guide our clients and ensure that they have these plans in place,” says Steve Walsh, chief client officer at Marsh. “A big part of this process is helping to educate clients on what these emerging risks are and what they mean for their particular business.”
Dealing with underinsurance
Survey participants were asked if they had suffered a high impact financial loss in the last three years. Of those who did, only 30% had it covered by their insurance policy.
When it came to indemnity periods, 40% of those impacted said that 12 months was not long enough for their business to return to the same gross profit they enjoyed prior to the loss. Almost two-thirds said that 24 months was a more realistic timeframe whilst 37% thought 36 months.
A recent Lloyd’s report showed that underinsurance was not just a local issue but also a global one, with efforts to close the underinsurance gap making limited progress. About $250 billion of assets globally remain uninsured while Asia-Pacific economies account for $205 billion of the insurance gap.
“The worst thing that we can do when it comes to clients' insurance coverage is to be complacent,” Walsh said. “Rolling out the same programme year after year without consideration for new and emerging risks and the changes in market conditions is not going to help solve the problem of underinsurance.”
The survey was completed by representatives from 132 organisations from across New Zealand – from SMEs to large corporates across a range of industries and organisational types.
