Organizations are facing some of the most difficult challenges they’ve ever experienced, challenges for which they were largely unprepared. this includes the current pandemic, but also climate change and cyber threats. Eric Andersen, President of Aon, shares his thoughts on some of the most pressing questions and issues companies face.
8On top of the humanitarian crisis from COVID-19, we are in a period of significant macroeconomic uncertainty. Companies must respond to immediate needs today, while also learning from this pandemic and thinking about the ongoing threat of long-tail risks. This is creating enormous, unprecedented pressure on organizations. Today, we are focused on the COVID-19 pandemic but other risks like climate change and cyber threats – to name just a few – haven’t gone away.
As a result, companies need to continue to innovate, build capability and use data-driven solutions. Hope is not a strategy. Protecting their people, intangible assets, and supply chains all while trying to maintain or increase revenue requires planning and the right partnerships, now more than ever.
Clients are working to better understand their risk through rigorous actuarial work or other data and analytics, optimizing the risk retention / risk transfer decision, studying changes to terms and conditions, providing more detail to insurers when necessary, and leveraging their captives.
We’re working to help our clients stress test programs, leverage our risk quantification and analytical capabilities to help them make more informed risk decisions, and become creative in finding solutions.
Clients are having a hard time predicting exposures such as fluctuations in revenue and payroll given the current business uncertainty. Plus, those experiencing a loss of revenues are becoming more creative in how they redeploy their people and assets to create new business opportunities that can help to restore revenues.
If we look at cyber insurance, policyholder demands amid the pandemic have focused on the increased use of and reliance on technology given a remote workforce. From a new buyer perspective, about 40% of organizations purchase a stand-alone cyber insurance policy, leaving many organizations without the protections that cyber insurance offers. For example, systems failure coverage – failure of technology not triggered by a breach – can be significant when companies are reliant on their technology to support a distributed workforce.
Intangible assets and intellectual property (IP) are another area where clients are becoming more focused. IP, even during good economic times, is undervalued and under-protected as an asset. Figuring out ways to do both – derive value, while fending off threats – will be critical for how companies continue to survive and thrive during times of volatility.
Finally, we’re seeing policyholders challenged with the fact that there isn’t a practical insurance mechanism for business losses related to COVID-19. And the concern isn’t in our rearview mirror. Rather, it is going to continue to create loss throughout 2020 and potentially beyond – something all companies and executive leadership teams will continue to navigate through to thrive after this crisis.