Managing contingent loss through adaptive strategies

Didier Schütz, Scor Global P&C

Most of the time, the total impact of business interruption and contingent business interruption is underestimated. According to some consultants around 50% of relatively large organisations experiencing a major loss collapse within the next two years, while close to 40% of medium-sized businesses fail within five years of surviving a major interruption to their operations. Companies that take more than 30 days to recover normal business operations are “highly likely” to go out of business. The reasons behind such failures are generally cashflow issues and the impact of the interruption on the company’s reputation, which is an almost impossible asset to evaluate. The decrease of market share after a loss is also a major issue. Insurance will compensate property damage, business interruption and contingent business interruption as per coverage terms and conditions, but there is no adequate protection for the loss of market share.