The majority of European companies feel underprepared for emerging risk and terrorism and political violence is their top concern, according to new research by ACE published today. However only 7% of companies have fully comprehensive insurance cover in place for terrorism and political violence and 34% have none at all.
The research focuses on six areas of emerging risk that ACE, as a global insurance specialist, has identified as increasingly relevant for 21st century businesses. Around a third of European companies (32%) and 27% of Spanish companies surveyed cite terrorism and political violence as an important risk concern for their business. In four of the six risk categories surveyed, over half of European companies say they feel somewhat or completely unprepared to manage these risks. These are terrorism and political violence risk, directors´ and officers´ liability risk, IT and cyber risk and business travel risk.
The research also discloses that the chief executive or chief operating officer has formal responsibility for risk management at 50% of European companies. The countries with the highest levels of CEO oversight are Germany, Spain and the UK.
In the wake of events such as the "˜Arab spring´ and the on-going risk of social and political turbulence across Europe, over half of European and, in particular, Spanish respondents say they feel underprepared to deal with the threat of terrorism and political violence (both at 53%). Furthermore, only 46% of European businesses and 44% of Spanish businesses have crisis management procedures in place to help manage their terrorism and political violence exposures. The research also reveals that 40% of Spanish executives surveyed rely on their insurer or insurance broker for guidance and information on terrorism and political violence risk.
The last five years have seen a marked shift in perception regarding terrorism and political violence risk with 64% of European companies and 77% of Spanish companies saying that it is an in increasingly significant issue for European businesses. Around 45% of European executives and 43% of Spanish executives say they have become more concerned about the risks to their own business. 42% of Spanish executives point to the negative economic outlook as a key driver. Despite this, according to the research, over a third of European companies (34%) and 27% of Spanish companies have no insurance coverage in place for either terrorism or political risk.
Angel Diaz, ACE Country Manager for Spain said: "Our research indicates that the majority of European companies feel underprepared to deal with the emerging risks they face. The research points to a number of steps that companies across Europe can take to increase preparedness. Taking formal responsibility at board level for driving a culture of emerging risk awareness throughout the organisation and putting in place crisis management plans to prepare for key scenarios are just two of these. In addition, the research suggests that companies would welcome more information from their insurance market partners on the changing risk environment and the insurance solutions that are available."
Piers Gregory, Terrorism Underwriting Manager, ACE European Group said: "It is notable that only 7% of European companies in our research have comprehensive cover for terrorism and political violence risk. A further one in five believes that these risks are covered under another policy, but our experience shows that this is often not the case. Insurers and brokers must work together to help European businesses understand the potential gaps that exist in their insurance cover and take informed decisions on insurance purchasing."
ACE has conducted this research as part of a survey of over 600 European companies, on a range of emerging risk issues, with more findings to be released in the near future.
The six risk areas researched are: terrorism and political violence risk, environmental risk, multinational/ export risk, IT and cyber risk, directors´ and officers´ liability risk, and business travel risk.
Summary of key findings
| Overall (Base) | Breakdown (highest and lowest in bold) | |||
| Board level (chief executive/chief operating officer) has formal responsibility for terrorism and political violence risk | 50% | Spain "´ 62% | ||
| UK and Germany "´ 53% | ||||
| Benelux "´ 49% | ||||
| Italy and France "´ 41% | ||||
| Percentage of companies that feel somewhat unprepared or completely unprepared for each risk category | Terrorism and political violence "´ 53% | (Terrorism and political violence risk only) | ||
| Directors´ and officers´ liability risk "´ 52% | France and Benelux "´ 61% | |||
| IT and cyber risk "´ 51% | Germany "´ 57% | |||
| Multinational/export risk "´ 50% | Spain "´ 53% | |||
| Business travel risk "´ 51% | Italy "´ 50% | |||
| Environmental risk "´ 48% | UK "´ 38% | |||
| Percentage of companies with no insurance cover in place for terrorism and political violence | 34% | France "´ 45% | ||
| UK and Germany "´ 36% | ||||
| Italy "´ 33% | ||||
| Benelux "´ 28% | ||||
| Spain "´ 27% |
About ACE:
The ACE Group is one of the world´s largest multiline property and casualty insurers. With operations in 53 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. ACE Limited, the parent company of the ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index.
Additional information can be found at: www.acegroup.com/eu
Notes to editors:
The research for ACE Insurance was carried out between: 13 / 04 / 2012 and 03 / 05 / 2012 by Opinion Matters who spoke to 606 European Risk managers / CROs / CFOs / COOs / people responsible for buying insurance from companies with turnover of £500 million+ for the UK and their equivalent in the European countries.
