Survey: RMs Lack Business Interruption Plans

NU Online News Service, April 8, 3:19 p.m.EDT?Most risk managers polled at an industry conferencethis week said they think the risks to their organizations'operations haven't increased much since the start of the war withIraq.

Eight-four percent expressed that opinion, according to a surveyby Allianz Global Risks of 145 respondents attending the annualconference of the Risk and Insurance Management Society in Chicagothis week.

Those polled also revealed some unpreparedness for businessdisruption risk and dissatisfaction with terrorism insuranceprices.

Breaking down the 84 percent number, Allianz reported that 64percent of respondents said risks have not increased at all, while20 percent said risks have risen "a little." Another 11 percentsaid risks have grown moderately, while just 5 percent said riskshave grown significantly.

As a result, more than three out of four (76 percent) said theirbusiness continuity plans have not changed at all since the war'sstart.

In contrast, Allianz reported that 42 percent changed theirbusiness continuity plans moderately or significantly after theterrorist attacks on September 11. The company said another 11percent who did not have a business continuity plan before theSeptember 11 attacks created one afterwards.

Brian Daly, senior vice-president and chief underwriting officerfor Allianz Insurance Company, said: "Risk managers, who coordinateall activities to identify and mitigate an organization's exposure,understood how risky the world was before the war started and hadalready taken steps to protect their enterprises. Their job is totake a dispassionate, analytical approach to evaluating andplanning for risk."

However, nearly one in five survey respondents (19 percent) saidthey are not confident that their business continuity plans areeffective. An additional 4 percent have no business continuityplan, which details how an organization responds to any event orcrisis that disrupts its operations.

"Given the potential threats to a company's operations, such assupply-chain interruptions, loss of property and technologycrashes, risk managers face a daunting challenge in developing andfunding business continuity plans that offer adequate protection totheir organizations," noted Mr. Daly. "Unfortunately, too manyenterprises still don't recognize the need for making these plans apriority."

Taking one major step forward in strengthening their businesscontinuity plans, 68 percent of respondents said they have adequateinsurance coverage for terrorism. In sharp contrast, 84 percent ofrisk managers who responded to a RIMS survey last year said theydid not have adequate terrorism insurance.

"Clearly, the insurers have moved swiftly to work with clientsand meet their terrorism coverage needs," said Jack Hampton,executive director of RIMS. "The shift in the marketplace is quiteimpressive. However, risk managers still aren't satisfied withpricing. Nearly half of respondents disagree with the statementthat the insurance market is fairly pricing terrorismcoverage."

Overall, though, a substantial number of risk managers expressedstrong satisfaction with commercial insurance products and pricing.When asked if their "carriers are providing products and pricingthat reflect a good understanding of your company's unique needsand circumstances," 39 percent of respondents answered "very muchso."

Allianz said the 145 respondents came from a broad cross-sectionof industries. Ninety percent of the respondents are from NorthAmerica, and 72 percent work for companies with more than $500million in annual revenues.

Alliance Insurance Company is the U.S. unit of Allianz GlobalRisks. Allianz Global Risks is the international industrial andcorporate risk insurance carrier of the Allianz Group.

Allianz Group is a global financial service provider. Withassets under management amounting to one trillion euros.