Climate Change: It’s Risky Business

Climate Change: It’s Risky Business

By James Bennett

 

As we all know, climate change is one of the most prominent topics in the news – so much so that it is being touted as a major deciding factor for Canadian politicians in the upcoming federal election. But, what does this mean for businesses?

Where this becomes an interesting topic is the implications it has on a public company’s board of directors. I.e., what measures are the directors taking to disclose their exposure to climate change, and how can it affect their directors’ and officers’ (D&O) insurance?

Climate Change, James Bennett articleAs a recent article called from Davies Ward Phillips & Vineberg LLP highlights, investors and stakeholders in corporations continue to seek greater transparency when it comes to climate-related reporting and the unsatisfactory disclosure regarding these risks. The article expands on this topic and notes how the Canadian Securities Administrators (CSA) published a report in 2018 on climate change-related disclosures. Due to their findings and the increased scrutiny mentioned above, the CSA published an updated Staff Notice on August 1, 2019, on the reporting of climate change-related risks.

We don’t yet know the true impacts of these changes to reporting guidelines. However, brokers can further help their public-company D&O clients by taking a proactive approach in addressing these new exposures. For each of their clients, brokers should ask themselves, “Does this company have an exposure to climate change?” And, if the answer is yes, the next question should be, “Does the company provide adequate disclosure of these exposures in their public filing documents?” If these companies are not providing adequate disclosure, then an opportunity to provide risk management advice arises.

What exactly should brokers be looking for?

Like most emerging risks, this is not an area where you will have a one-size-fits-all answer because each industry is going to be different. For example, if your client is a mining company, you want to be looking for information on what they are doing with the mines. Some starting questions to think about might be:

  • Are they dependent on fresh water for their refining process?Climate Change, James Bennett article
  • What is the water source like? Is there the potential of it drying up and impairing the mine?

Another example would be if a public company has coastal operations. In this case, you might want to consider:

  • What happens if the sea level rises a foot?
  • How will a higher sea level impact the business?
  • Is the company disclosing these types of issues/exposures?

These are only a couple of examples of the possible scenarios that may arise from climate change. Any issues that might emerge will hover around the impacts of climate change on a business, the risk assessment on climate change risk and the disclosure of these risks. 

To learn more about what climate change means for the insurance industry, you can read the original article here.

Find out if your client’s business may be exposed by contacting your Trisura representative today! Contact us here.

Keeping up with Technology: The Importance of Cyber Insurance

Keeping up with Technology: The Importance of Cyber Insurance

By Sara Ametrano

 

The more we rely on technology in both our professional and personal lives, the more at risk we, as individuals and companies, are to be targeted by hackers.

Cyber-attacks can come in a variety of forms and steal all kinds of information if successful. Through panel discussions and presentations, April’s NetDiligence conference explored what the evolving nature of cyber can mean for the specialty insurance industry.

A peril:

When cyber coverage first emerged, it centered around liability. As time passed, the cyber risk area expanded, and it included possible scenarios such as social engineering and extortion. And today, clients are at a higher risk than ever before.

Where property and casualty policies are created based on hundreds of years’ worth of information, cyber threats are new in comparison. Creating a sustainable cyber policy plan is proving to be a challenge for underwriters today due to the lack of data available and the ever-evolving nature of the industry.

Ransomware:

One of the cyber areas seeing an increase in attack frequency and severity is ransomware. Beazley Breach Response Services reported that, in 2018, average ransomware demands were $116,000, compared to $15,000 just the year before. The report also revealed that the main targets of ransomware attacks are small to medium-sized business, absorbing 71% of the crimes.

These numbers stress the importance of the need of expertise in the field. Hackers have sharpened their skills to learn their target’s financial position so that they may determine the sum they will demand.

Silent cyber:

Where standalone cyber coverage does not exist, cyber and data breaches may fall under other policies, unbeknownst to insurers. This is what the industry refers to as “silent cyber.” Companies might not take these types of exposures into consideration, which can potentially expose their other policies that do not specifically exclude cyber/data breaches. At a glance, only 10% of silent cyber situations are clearly priced and defined, 40% have definitions but are not priced and the remaining 50% are neither defined nor priced.

So, now what?

The growing nature of technology and lack of data surrounding cyber makes it difficult to create a plan in the event an attack occurs. The conference provided tips on how to mitigate risk and minimize the confusion non-affirmative risk management can bring:

  • Analyze policy language and claims;
  • Collaborate with ethical hackers (the good guys) to better understand the motives behind these attacks and how they might appear in different scenarios;
  • Continue to update policy wording as need be.

 

 

If you have any questions or would like to request a quote, please contact Trisura’s underwriting specialists.