Business interruption is the leading cause of losses for companies, multinational organizations and non-governmental organizations (NGOs) that operate outside the U.S., according to a new survey by Clements Worldwide. The Clements Worldwide Risk Index released today also shows that property damage and general liability are the close second and third largest sources of financial losses among respondents.
In the face of these risks, 35% of organizations indicate they may delay global expansion. This is up from 27% in the Winter/Spring 2016 Edition of the Clements Worldwide Risk Index.
"We are aware of the concerns regarding global expansion and are working with an increasing number of companies to access the right coverages abroad based on where they working and their operational focus," says Chris Beck, President of Clements Worldwide. "As organizations are reconsidering their coverage, they are coming to terms with the fact that man-made risks like political violence and cyber-attacks are as important as environmental risks like weather and catastrophic perils in terms of their potential threat to global operations in a way that threatens sustained growth."
The survey also highlights increased risks of political violence and terrorism, with 25% of respondents citing terrorism as their top concern in this edition of the Index. The top concern among all respondents was fears related to lack of protections against cyber-attacks and subsequent cyber liability, which topped the list of concerns at 26%.
In addition to a global risk overview, the Summer/Fall 2016 Edition of The Clements Worldwide Risk Index provides new analysis of the risks faced by three key global sectors: NGOs, Government Agencies & Contractors, and International Schools.
While NGOs and International Schools reported findings consistent with the global results of this edition, the top losses reported by respondents affiliated with Government Agencies & Contractors showed troubling differences. Forty-three percent of these respondents identified terrorism as the top source of losses. Cyber liability was second, at 36%. Political/labor unrest followed closely behind at 33%. In line with previous surveys, terrorism still remains a top concern as reported by 39% of these respondents vs. 25% of overall respondents.
"No single organization can stop the increased threats to global operations," says Beck. "The Clements Worldwide Risk Index does make clear that organizations can do more to reduce the risks posed by particular threats like political violence, kidnap and ransom, and cyber threats. Creative and proactive risk management, including the right insurance, is a critical factor in the continued growth of multinational organizations and the entire global economy."