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Emerging and Evolving Risks

Identifying and understanding the world’s emerging and evolving risks and their impact to society and our customers is at the center of all that we do.

Key risk considerations in navigating geopolitical conflicts
May 5, 2022

How insurers can help multinationals manage through rapidly changing geopolitical conditions.

By Andy Zoller, Head of International & Captive Solutions, U.S. National Accounts & Middle Market, and Spring Uphoff Neely, Head of IPZ Strategy & Execution

Multinationals invest significant resources to plan for potential risks, from supply chain disruptions to cyber threats and natural catastrophes. But even the best-laid plans can be challenged by significant geopolitical events, which often have wide-ranging effects — and may challenge a company’s ability to deliver when its capabilities are needed most.

During calamitous events, insurance carriers can provide expertise and support to help companies adapt their risk plans and protect their ability to deliver for their customers. Drawing on Zurich’s 150 years of experience, here are key risk considerations for multinational businesses managing through a fast-changing geopolitical environment.

Ability to pivot based on shifting risk exposures

A rapidly unfolding crisis — whether a war, pandemic or other event — can alter risk exposures overnight. For example, in the early days of the COVID-19 pandemic, there was widespread concern the virus was transmitted by contact with contaminated surfaces. Some bottled water companies rapidly shifted to manufacturing hand sanitizer. Alcohol-based chemicals present significantly different risk characteristics than filling plastic bottles with purified water. Hence, a socially responsible, emergency action filled a vital need, but also altered the manufacturers’ risk exposures.

While this kind of agility is often an asset, it also raises the need to review and update the company’s risk program and ensure it covers any new exposures. This involves tapping into regional and technical knowledge to shift gears quickly, as well as having the servicing network and boots on the ground to provide the local information and risk perspectives required.

Risk managers should reach out to the technical underwriting resources of their insurers as well as their brokers to explore the agility of their insurance programs to address rapidly changing risk exposures.

Complying with changing global regulations

Even in the best of times, multinational companies must be keenly aware of local country business, insurance and trade regulations to stay in the good graces of authorities and avoid costly penalties and reputational risk. However, during a crisis with world-shaking impacts, the complexity of complying with regulatory requirements and  sanctions takes on a new degree of magnitude. How do sanctions affect the servicing of existing policies? The creation of new ones? What are implications for a third-party risk partner versus a licensed agency? How do the various governments involved define what activities in which companies can and cannot be engaged?

At Zurich, a team of knowledgeable professionals works through these questions, with answers refreshed sometimes daily based on fast-changing events. They’re also able to provide tailored responses. The action plan for a multinational may vary based on their global footprint and risk profile (e.g., Builders Risk, D&O, Auto). At the same time, customers also have access to Zurich’s Global Program Support (GPS) tool, which includes regulatory and tax requirements for all countries and jurisdictions where Zurich operates. It is updated regularly by regulatory and tax specialists around the globe.

These resources can help provide multinational risk managers with the knowledge they need to make informed decisions about adjusting their risk programs.

Supporting employees on the ground

In the early days of a political crisis, period of social unrest or military conflict, the governments of the U.S. and other nations may advise its citizens to evacuate. Some insurance programs include services that can provide critical support during these unfortunate circumstances, even for those just building their global presence. For example, Zurich’s base program for international exposures, Exporter Solutions, includes access to Zurich Travel Assist (ZTA) at no additional cost. ZTA provides 24/365 access to specialized services in medical, legal, information security or personal assistance.

Multinationals should be sure to review their services and communicate them to employees who may need them. For example, ZTA has assisted customers by coordinating overseas medical services, providing an interpreter, providing emergency advance of funds, or even repatriating employees and evacuating them from areas with escalating security challenges. Another Zurich product includes access to a premier crisis consultancy, which provides even more of these capabilities if needed. While the hope is to never need these services, they can be invaluable for multinationals in taking care of their team members.

Protecting online resources

Unlike the geopolitical risks of 100 years ago, today’s multinational companies must plan for digital attacks, with global conflict potentially exacerbating those risks. Even if attacks are not directly targeted against specific government or business targets — and even if intended against only one target country — such attacks are likely to cause spillover effects on unintended targets due to global connectivity.1

While cyber risk events loom large for risk managers and are happening more frequently, there are steps that can and should be taken now to mitigate these risks. Some insurers offer cyber security risk engineering services, including cyber risk gap analysis, incident response plan evaluation, ransomware threat assessment, and employee cyber security awareness training (including phishing and social engineering awareness). Partnering with experienced cyber risk professionals can help risk managers accelerate their cyber resiliency and recover more quickly if and when a ransomware attack hits any of their multinational operations.

Given their broad operations, multinational companies have a great deal resting on the security and resilience of their data, networks and other IT resources. During a geopolitical crisis, cyberspace may become a key battlefield. Cyber security must be a strategic priority both for international businesses and their insurers.

Supporting your mission and values

The nature of the insurance industry is to aid people and institutions in their times of need, helping them protect their capabilities so they can deliver for their customers. Most global insurers with long-standing international networks have helped customers deal with catastrophic events and can be a key resource as new conditions unfold.

In these unprecedented times, we are reminded of the importance of global partnership and community.

For decades, the insurance industry has aided people and institutions in their time of need. This historical perspective and experience can make global insurers, with their understanding of customers’ values, priorities and risk needs, a key resource as new geopolitical conditions unfold.

Many facets of geopolitical change are distressful and outside of our control. But even in uncertain times, companies can take action to protect their ability to deliver when their products and services may be most needed.

1. Flesch, Eli. “Russia’s Ukraine Invasion Deals Shock To Insurance Industry.” Law 360 Insurance Authority. 4 March 2022.