Risk Manager Don’t See Increased Risk from War with Iraq

An overwhelming 84 percent of professional risk managers think risks to their organizations’ operations have not increased at all or have increased only slightly since the start of the U.S. war with Iraq last month, according to a survey by Allianz Global Risks.

Specifically, 64 percent say risks have increased “not at all” while 20 percent say risks have risen “a little.” Another 11 percent of 145 respondents, who attended the annual Risk and Insurance Management Society Inc. conference in Chicago earlier this month, say risks have grown moderately while just 5 percent say risks have grown significantly.

As a result, more than three out of four (76 percent) say their business continuity plans have not changed at all since the war’s start. In contrast, 42 percent changed their business continuity plans moderately or significantly after the terrorist attacks on Sept. 11. Another 11 percent who did not have a business continuity plan before the Sept. 11 attacks created one afterwards.

“Risk managers, who coordinate all activities to identify and mitigate an organization’s exposure, understood how risky the world was before the war started and had already taken steps to protect their enterprises,” Brian Daly, senior vice president and chief underwriting officer for Allianz Insurance Company, remarked. “Their job is to take a dispassionate, analytical approach to evaluating and planning for risk.”

More broadly, however, nearly one in five survey respondents (19 percent) say they are not confident that their business continuity plans are effective. An additional 4 percent have no business continuity plan, which details how an organization responds to any event or crisis that disrupts its operations.

“Given the potential threats to a company’s operations, such as supply-chain interruptions, loss of property and technology crashes, risk managers face a daunting challenge in developing and funding business continuity plans that offer adequate protection to their organizations,” Daly said.

“Unfortunately, too many enterprises still don’t recognize the need for making these plans a priority.”

In one major step forward in strengthening their business continuity plans, 68 percent of respondents say they have adequate insurance coverage for terrorism. In sharp contrast, 84 percent of risk managers who responded to a RIMS survey last year said they did not have adequate terrorism insurance.

“Clearly, the insurers have moved swiftly to work with clients and meet their terrorism coverage needs,” Jack Hampton, executive director of RIMS, commented. “The shift in the marketplace is quite impressive. However, risk managers still aren’t satisfied with pricing—nearly half of respondents disagree with the statement that the insurance market is fairly pricing terrorism coverage.”

Overall, though, a substantial number of risk managers expressed strong satisfaction with commercial insurance products and pricing. When asked if their “carriers are providing products and pricing that reflect a good understanding of your company’s unique needs and circumstances,” 39 percent of respondents answered “very much so.”

Topics Trends Risk Management