Egypt’s Troubles Mean Companies Need to Reassess Risk, Says Marsh

February 1, 2011

The fallout from the ongoing events in Egypt – protestors have called for a million people to assemble in Cairo today – is affecting both foreign and domestic companies.

Several insurance executives in London agreed that “communications are very difficult. The telephone lines are working, but they’re not, very reliable.” However, none of the people actually in Egypt appear to be in any immediate danger.

As a result of the demonstrations, and the calls for political change, global insurance broker Marsh has issued a bulletin, which points out that companies are re-assessing the adequacy of their insurance coverage and risk management arrangements.

The concerns are spreading beyond Egypt and Tunisia, according to Marsh, as 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,” Marsh said.

Evan Freely, global head of Marsh’s Political Risk and Trade Credit Practice, said all industries are affected.

“We have already seen companies across 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 already be gathering as much information as possible to prepare for the claims process,” Freely said.

“These incidents in Egypt should cause every company with operations in emerging markets to re-evaluate the adequacy of their risk management strategies. 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.

Freely said that 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. “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,” he said.

Source: Marsh

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