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Marsh: Cairo Political Unrest Has Firms Rethinking Their Coverage, Risk Management

Source: Marsh


Posted on 02 Feb 2011

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Companies are re-assessing the adequacy of their insurance coverage and risk management arrangements in the wake of political unrest in Cairo and other cities across Egypt, according to Marsh. Companies investing, manufacturing, and trading in emerging markets are increasingly realizing that they face a more complex risk landscape. As these events demonstrate, instances of political violence can occur with little warning in countries previously considered relatively stable.

Commenting on recent developments, Evan Freely, Global Head of Marsh's Political Risk and Trade Credit Practice, said: "We have already seen companies across a number of industries affected by acts of political violence in Egypt, including those in the oil and gas, hospitality, and real estate sectors as well as professional services firms and financial institutions. Affected companies should be gathering as much information as possible to prepare for the claims process.

"These incidents in Egypt should cause every company with operations in emerging markets to re-evaluate the adequacy of their risk management strategies," Mr. Freely said. "Companies need to have plans in place that can protect both colleagues and strategic assets."

Companies with operations in countries affected by political unrest face losses from risks such as business interruption, theft of and damage to property, threats to contract for both purchase and supply, late payments—potentially impairing cash flow—and the need to evacuate employees.

"Some buyers of terrorism insurance have found themselves without cover following civil disturbances, for example in Thailand last year, because of disagreements about whether certain events were acts of terrorism or political violence," Mr. Freely added. "Companies need to make sure that they have insurance coverage for a broad range of perils, reducing uncertainty that can be caused over the classification of an event."


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