Emerging and Evolving Risks -->
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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.

May 27, 2021

The pandemic's impact on international business will be felt for years to come. Here are some risks and trends global business leaders can’t afford to ignore.


By Andy Zoller
Head of International Programs, Zurich North America

Global business is always evolving, but nothing could have prepared companies for the impact wielded by the pandemic. Even the obstacles we thought we could anticipate ultimately morphed into entirely different risks.

Not all the changes to the international risk landscape have been due to COVID. Other factors, like digitalization and artificial intelligence, continue to make our world “smaller” and the hard market has made finding capacity a daily struggle.

Now that 2020 is behind us, it’s worth considering these new and emerging risk trends that may be important for global companies over the next 10 years.

Growing supply chain complexity

COVID-19 exposed the vulnerabilities of the global supply chain like no other crisis before it. In fact, only 2% of respondents to a survey conducted recently by EY felt they were fully prepared for the pandemic.1 Companies were forced to confront new challenges like national lockdowns, mandatory factory closings, travel disruptions and even a global container shortage, all of which created significant obstacles to running their businesses. As a result, companies have learned lessons that will serve them well in the coming decade.

Companies are recognizing that just-in-time inventories, while cost-efficient, can create major problems if a crisis cuts them off from their suppliers. Businesses see the need to diversify their supply chains and are deploying broader strategies to create redundancies. Any company can expect a shutdown lasting at least a month or so every 3.7 years, according to a recent article by McKinsey.2 Having several options, albeit pricey, may still be less expensive than suddenly finding yourself without any.

Just as important, businesses must become proactive about potential risks not only with their direct suppliers but also with their suppliers’ suppliers and further down the chain, allowing them to better manage everything from raw materials to finished goods. It will be challenging: Two-thirds of companies surveyed by McKinsey said “they can’t confirm the business-continuity arrangements with their non-tier-one suppliers.”2 As we look to the future, artificial intelligence (AI) and data analytics should provide greater transparency throughout the supply chain. However, in a global marketplace, no plan is foolproof. Remember the Suez Canal disruption in March?

In addition to using AI, companies may also want to partner with suppliers who have invested in robotics and 3D printing, and they should review the pandemic response of the countries where they operate. While their prior in-country capital investment will clearly be a factor in any future decisions, boosting a company’s resilience is critical in the long run, so it must also be weighed. Exploring these technologies and assessing a country’s infrastructure are imperative to preparing for the next disruption.  

The acceleration of digitalization and the online marketplace

COVID was a game changer for some businesses that suddenly watched their online presence expand and, subsequently, their global presence, too, noted the World Economic Forum’s Global Risks Report 2021. The report estimated that worldwide e-commerce grew over 20% in 2020.3

While this trend was already on an upward trajectory, COVID sped up the transition by several years. The Adobe Digital Economy Index estimates that global e-commerce sales will reach $4.2 trillion by year’s end, “equivalent to a top five country based on GDP, ahead of Germany.”4 People’s maturity of buying goods online has skyrocketed, and we know that will bring new cyber security challenges.

Companies should think hard about their cyber risks and take measures to protect themselves. A top short-term risk cited in the Global Risks Report 2021 is the failure of cyber security measures. In fact, globally, the cyber attack volume doubled from the second half of 2019 to the first half of 2020 as many hackers leveraged the COVID-19 crisis to infiltrate networks.3  With more and more remote employees, the increase in access to a company’s network cannot be overstated. Add to that more and more local networks, which historically were contained in-country, are now interconnected in the cloud, so the risk to the worldwide operations cannot be ignored.

Sustainability initiatives and their impact on directors and officers

Being a good corporate citizen today includes promoting environmentally friendly initiatives that align with growing demands for corporate accountability. For companies that do business around the world, it’s a lot more complicated than just asking, “How can we get green?”

A company’s environmental, social and corporate governance (ESG) commitments can create potentially risky exposures for its directors and officers if shareholders believe that companies have either underperformed, misstated sustainability information or overstated their commitment to those goals. Exposures include governmental, financial and reputational risks.

Companies that do business globally will have to think beyond their corporate headquarters. Sustainability will become a local issue with D&O implications, and they’ll have to think about this issue for every CEO and board of directors in every country of their subsidiaries. Companies can push a green agenda globally, but how they respond locally may largely depend on the social push/mood in country.

This scenario can change swiftly. For example, China has only recently agreed to reduce carbon emissions by 2060. With the September 2020 announcement, one could theorize that for the directors and officers of foreign companies in China, it was not at the top of their list of priorities. We may see a shift locally by these subsidiaries to push more sustainable business practices. If they don’t, local subsidiaries and the directors and officers could open themselves up to the legal and financial impacts of inaction.

Companies will also need to rigorously monitor their vendor selection — not only their main suppliers, but also further down the chain. These smaller suppliers often fly under the radar and may possess inadequate resources and expertise to handle sustainability requirements. They also may operate in countries with lax environmental oversight and/or requirements, and they may lack the financial resources to support the sustainable measures espoused by your company.5

Compliance with in-country insurance requirements

Given the heightened level of geopolitical change, it will be increasingly challenging for companies to stay on top of local insurance regulations.

“A combination of the COVID-19 pandemic, trade tensions, climate change, and a range of other factors means the probability that the performance of companies, markets or economies will be impacted by political decisions, events or conditions is at post-World War II highs,” notes a report from EY.6 Think of Brexit or the current political flux in Myanmar as two examples. We’ve also yet to see the fallout as countries grapple with a post-COVID economy.

Every day we’re seeing new regulations, which can affect premium tax requirements and the local risk services that can be provided based on your individual insurance program structure. What’s at stake for companies that don’t monitor global premium tax requirements? Audits and substantial fines and penalties are real threats with financial and reputational consequences.

Monitoring global compliance must be ongoing, particularly when binding a multinational insurance policy that needs to align with different laws in different countries. Insurance carriers are among the first to receive notices of changing laws and regulations. It will be critical to work with a carrier that takes this risk seriously and has a proven ability to manage and act on real time, in-country data for the places where you’re doing business.

3D printing and domestication of production

As mentioned previously, supply chain problems related to COVID, as well as urgent healthcare needs fueled by the pandemic, helped put additive manufacturing (aka 3D printing) in the spotlight. In the process, it’s potentially ushering in a new era of domestic manufacturing.

3D printing continues to expand in breadth and capacity. In a recent industry survey of 1,200 respondents from a variety of sectors, 74% said they were planning to invest in 3D printing.7 This tech is producing everything from t-shirts and golf tee markers to COVID-19 test swabs and human body parts. The sky’s the limit for this nimble technology as AI, more sophisticated software and the discovery of new materials will further its growth. To put this in perspective, the additive manufacturing market grew by 21 percent in 2020, to a total of $12.6 billion, and growth is expected by 17 percent annually over the next three years.8

3D printing technology will solve a lot of problems for companies navigating an unpredictable world, potentially making it easier and more cost-efficient to produce goods in the U.S. This may have an impact on large insurance policies in foreign countries such as China and Mexico, because you won’t be as dependent on outsourcing your production.

The initial capital costs of implementing additive tech are steep. That said, costs are less prohibitive when factored out over the long term and coupled with less expensive technology. As 3D printing becomes more mainstream, it’s a trend to heed.

A gradual shift to holistic risk management

Over the course of my career as an underwriter and broker, a lot has changed in how international coverages are handled. The market for things like D&O, professional liability and other ancillary products was not fully developed in most countries 15 years ago, so these coverages were primarily handled by a non-admitted global policy. Typically, the specialty products were left to be handled in this potentially non-compliant fashion, and that’s pretty much what everybody in the industry was doing back then. Some still do.

Global risks are changing quickly, and the approach to international coverage will need to change, too. It’s not just about the Property and Casualty (P&C) anymore. It’s the financial lines as well, and the aforementioned ancillary coverages, including the growing demand for cyber.

You shouldn’t be thinking about your international risk from a one-line by one-line basis. You need to start thinking about how you can help cover all of your customers’ international risks. Multinational insurance programs need to be coordinated, with coverages that are consistent and standardized in all the jurisdictions where a company operates. This coordination provides transparency around those purchases and gives the home office more control over what the local offices are doing.

Doing it the old way, with a non-admitted global solution, or the uncoordinated purchase of local policies, may result in higher expenses as well as coverage gaps and inconsistencies. With so many laws and regulations that vary from country to country, a controlled master program that goes beyond P&C to include solutions for other risks just makes sense. In addition, the multiline approach addresses the growing consumer demand for ease and transparency.

And it’s not just for the benefit of the U.S. home office. It also addresses growing concerns in local offices about there being sufficient protection for them. For example, insufficient D&O limits — with the possibility of the U.S. coverage eroding limits available to foreign subsidiaries — can have a direct impact on individual boards of directors. This is a risk that helped fuel the creation of Zurich’s new International Towers product, a stand-alone D&O solution that protects foreign corporate boards of U.S.-domiciled corporations around the world.

When you commit to a multiline, holistic approach, it’s important to consider the servicing that will need to support it. Servicing is, in fact, the most labor-intensive piece of an international program. You need the same local issuance, same local structure and same approach to claims handling. When you get consistent servicing across multiple lines, it makes the overall placement so much easier to manage. We’re starting to see more brokerage teams embrace multiline coverages, and it represents the next wave of expansion of global programs.

In closing, these are just a few of the risks and trends that the global pandemic has created for businesses of all sizes. Companies will need to be forward-thinking as they recognize, prepare for and embrace a new international playing field. This means not only seizing business opportunities that can put them ahead of their competition, but also protecting themselves from the risks these opportunities create.

To quote John F. Kennedy, “Change is the law of life. And those who look only to the past or present are certain to miss the future.”

Andy Zoller is Head of International Programs for U.S. National Accounts and Middle Market at Zurich North America, where he's responsible for Zurich's overall international value proposition and go-to-market strategy.


1. Harapko, Sean. “How COVID-19 Impacted Supply Chains and What Comes Next.” EY. 18 February 2021.
2. Sneader, Kevin and Shubham Singhal. “The Next Normal Arrives: Trends That Will Define 2021 — and Beyond.” McKinsey & Co. 4 January 2021.
3. Klint, Carolina. “These Are the Top Risks for Business in the Post-COVID World.” World Economic Forum. 19 January 2021.
4. “Adobe Digital Economy Index: COVID-19 Report.” Adobe. 15 March 2021.
5. Villena, Veronica H. and Dennis A. Gioia. “A More Sustainable Supply Chain.” Harvard Business Review. March-April 2020.
6. McCaffrey, Courtney Rickert, et. al. “What Elevated Levels of Political Risk Mean for Business in 2021.” EY. 9 December 2020.
7. McBurnett, Marie. “Report: 74% of Companies Plan to Invest in 3D Printing in 2021.” MachineDesign. 29 September 2020.
8. “Additive Manufacturing Trend Report from 3D Hubs Sees AM Growing by 21% in 2020, Despite COVID-19.” 3D Printing Media Network. 23 April 2021.

The information in this publication was compiled from sources believed to be reliable and is intended for informational purposes only. All sample policies and procedures herein should serve as a guideline, which you can use to create your own policies and procedures. We trust that you will customize these samples to reflect your own operations and believe that these samples may serve as a helpful platform for this endeavor. Any and all information contained herein is not intended to constitute advice (particularly not legal advice). Accordingly, persons requiring advice should consult independent advisors when developing programs and policies. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this publication and sample policies and procedures, including any information, methods or safety suggestions contained herein. We undertake no obligation to publicly update or revise any of this information, whether to reflect new information, future developments, events or circumstances or otherwise. Moreover, Zurich reminds you that this cannot be assumed to contain every acceptable safety and compliance procedure or that additional procedures might not be appropriate under the circumstances. The subject matter of this publication is not tied to any specific insurance product nor will adopting these policies and procedures ensure coverage under any insurance policy.