BUSINESS INTERRUPTION INSURANCE IN THE COVID-19 ERA
R&C: To what extent has the coronavirus (COVID-19) pandemic focused companies’ attention on business interruption risk?
Mukhtar: While the pandemic is certainly a uniquely large-scale, global catastrophe event that has caused significant disruption to businesses and their supply chains, companies were alive to the risk of business interruption prior to COVID-19. This is due to operational resilience factors, including rising reliance on technology and data, heighted cyber security risks and the vulnerabilities associated with management of third parties and increasingly global supply chains in the context of global political and socioeconomic instability. Brexit, for instance, continues to cause significant disruption in supply chains for both UK and European businesses. Arguably, companies had not foreseen pandemics as a key factor that could lead to business interruption until COVID-19 occurred. Unsurprisingly however, by 2021 this had changed. For instance, according to the Allianz Risk Barometer survey, the pandemic featured as the main cause of business interruption risk in 2021, highlighted by 59 percent of respondents. It had only been identified by 3 percent of respondents the year before.
Jul-Sep 2021 Issue
FTI Consulting