Organisations should learn lessons from the exceptionally severe and profile catastrophes experienced worldwide last year and take steps to reduce adverse impacts from future incidents, Marsh said yesterday.
In Lessons learned from the catastrophes of 2011, the insurance broker and risk management company highlighted five major risk and insurance tops arising from last year's events. These were:
- Denial of access;
- Strike, riot, civil commotion or terrorism;
- The differences between flood and storm damage;
- Contingent business interruption;
- and, 72-hour insurance notification clauses.
Companies must re-examine their risk management strategies and introduce new methodologies to strengthen their operational and financial resilience, Mercer said.
In particular, it said that the events of last year had raised concerns around the suitability of standard denial of access cover, which is typically only for short-term incidents. Contingent business interruption insurance is increasingly important to businesses, it noted, especially in light of supply chain failures following the Japanese earthquake and tsunami and the floods in Thailand.
David Pigot, chairman of Marsh's global claims practice, said: 'While the risks associated with the events of 2011 were largely understood, their sheer scale and complexity, combined with the devastation they caused, were unprecedented.
'These events not only exposed weaknesses in the risk strategies of many organisations worldwide, they also challenged the insurance industry to develop policy wordings that are more responsive to this rapidly evolving risk landscape.
Organisations should explore 'every necessary measure' to protect employees, assets and balance sheets, he said. Learning lessons from past events would allow them to reduce the impact and potential for future losses, as well as minimising insurance claims.
'While not all damage and economic losses are insured, there has still been a significant insurance and risk management response to the events of 2011,' he added. 'In general, the insurance industry has demonstrated its value and played its role in the process of regeneration for affected clients and communities.'