If you cater to clients who run large businesses, you know that they face increasingly varied risks every day from such as terrorism; service interruption; supply chain disruption; reputational risk; political instability; and challenges to intellectual property rights.
While conventional insurance will cover aspects of a number of such problems, there are others that are not so straightforward: reputational risk, for instance, for a company who cannot deliver, or perhaps a company loses a court case to determine ownership of intellectual property, necessitating a work-around or even abandonment of a complete product line.
How can a company cope with such contingencies? Perhaps with a little help from London-based Lockton Companies LLP, which recently announced that it has developed a set of new risk tools to help companies cope with the "uninsurable."
Emily Freeman, executive director, technology and global privacy practice at Lockton, said that coverage is designed around the eventualities a company fears: "You define what keeps you up at night." While previously a business might have had to opt for multiple specialized policies to cover what it could of such specialized risks, or take its own steps to mitigate losses if coverage could not be bought, Lockton's enterprise disruption contingency insurance provides individualized coverage against risks that might haunt a company's board or CEO in the wee hours.
A typical business that might use such coverage would be one with at least $100 million in revenues. Says Freeman, "There's no minimum revenue, but it starts to get much more meaningful in the middle range and up." There's no upper end, either, she says, although coverage is "not designed to solve the problems of the Fortune 50."
What would such insurance cover? Contingency, operational and reputational risk, and their effects on EBITDA income and expenses—loss of business income and the incurring of extra expense that stems from losses outside traditional physical damages.
