Resource Constraints Hinder Risk Managers From Preparing For Catastrophes

Time and resource constraints are hindering risk managers' efforts
to help their organisations prepare for catastrophes, such as power
outages, avian flu or extreme weather, according to the latest
Economist Intelligence Unit (EIU) report sponsored by the ACE Group of
Insurance and Reinsurance Companies.

Over half of the 225 global risk officers and other senior risk
professionals questioned as part of the survey stated that while
preparation for high impact but low probability events was important,
they lacked sufficient time and resources to develop detailed
contingency plans. More than 70% said that their organisation's
investment in catastrophe risk management had either remained static
or increased only slightly during the last three years. A further 40 %
said that they did not regard these events as a priority and that
little or no attention was being given to preparation.

Commenting on the findings, Brian Owens, Chief Catastrophe Risk
Officer at ACE European Group, said: "This survey confirms efforts the
risk management community is making to ensure their organisations are
prepared for catastrophes but highlights the difficult conditions in
which they are working."

"With competing pressures on time and resource, planning is being
forced down a short term track. While the effects of 'today's'
problems such as power outages can, of course, be devastating, the
world is changing around us and new threats such as avian flu, climate
change and terrorism are moving up the agenda. Unfortunately, the
survey results suggest that too many European risk managers perceive
events such as Hurricane Katrina as something far removed from
businesses here. In truth, these global challenges are as relevant to
Europe as any other region. Dreadful events like Katrina only confirm
the critical importance of effective planning and preparation."

The role of insurers in catastrophe risk planning was seen as key
with over 40% of survey respondents saying they had consulted with
their insurance company to develop their plans. This importance was
further reinforced with over half of those questioned (52%) stating
that they had 'fairly high' confidence that their company's insurance
policies would provide adequate cover in the event of a catastrophe
with nearly 11% describing their confidence as 'very high.'

While time and resource issues are restricting risk managers'
ability to prepare, the potential impact on businesses of some kind of
catastrophe is causing real concern within the global risk management
community. The risk from power outages was viewed as the most serious.
Over 45% of those questioned saw the threat as significant. This
compared to 42% for avian flu. The impacts of other high profile
threats such as acts of terrorism or extreme weather events were also
cited by 35% and 32% of respondents respectively as areas of
significant concern.

The allocation of adequate resources is crucial for risk
professionals and this is borne out by the fact that a variety of
tools are being used to manage catastrophe risk. Scenario planning was
the most popular tool with nearly 57% of those questioned using it.
The specialist training of employees was also referenced by 47% and
the testing of disaster recovery plans by over 46%. Lack of resource
is clearly still an issue though with 16% claiming they use no tools
to support their catastrophe planning.

Over 36% of those questioned claimed that they revised their
catastrophe risk plans once a year with nearly 13% saying they revised
their plans more often than this. 21% only reviewed their plans every
two-three years. Again, and more worryingly, almost 13% said that they
had no catastrophe plans at all.

Note to editors

The EIU Report, 'Reputation: Risk of Risks', is the fifth in a
series of reports from the EIU's Global Risk Briefing, a research
programme targeted at senior executives responsible for managing
corporate risk. It is based on the findings of a survey among 225
senior executives, responsible for risk management, thirty six per
cent of whom are from companies in the financial services sector. The
Global Risk Briefing is sponsored by ACE, Cisco Systems, Deutsche
Bank, IBM and KPMG.

ACE

ACE European Group has established branch offices in 16 countries
across Europe, Freedom of Services permissions to operate in 27 EEA
countries and affiliate offices in Egypt, Bahrain and Pakistan.

ACE European Group comprises the operations of ACE Europe, ACE
Global Markets and ACE Tempest Re Group. ACE Europe provides a range
of tailored Property and Casualty, Accident and Health and Personal
Lines solutions for a diverse range of clients. ACE Global Markets
(AGM) is ACE's specialty international business, underwriting through
ACE's Lloyd's Syndicate 2488 and UK registered company ACE European
Group Limited. Specialty lines include excess and surplus lines
business, Marine, Aviation, Energy and Political Risk as well as
Property, Financial Lines and Accident and Health. Additional
information on ACE European Group can be found at
www.aceeuropeangroup.com.

The ACE Group of Companies is a global leader in insurance and
reinsurance serving a diverse group of clients. Headed by ACE Limited
(NYSE:ACE), a component of the Standard & Poor's 500 stock index, the
ACE Group conducts its business on a worldwide basis with operating
subsidiaries in more than 50 countries. Additional information can be
found at: www.acelimited.com