Corporate Insurer Protects Businesses from Natural Disasters

Zurich Financial Services insures suppliers against risks from natural disasters, and has been for four years. Supply chain product leader Nick Wildgoose said they study 25 risk areas. They look at plant locations, competitors offering alternative sources, and factors affecting supply. Political threats, terrorism, natural disasters, and other risks can affect businesses.

Climate shifts make major floods bigger and more frequent, causing huge concern. Zurich works with global mapping company Esri to develop maps of potential threats like flooding, earthquakes, income disparity, and political risk. Esri shows previous big calamities and offers real-time maps of current floods or tsunamis. Countries provide supply evacuation links and Esri services hazard areas.

Zurich and Esri are also working together to help businesses understand risks. Building a factory in a flood-prone area, for example, can require a landfill for elevation. Zurich is the only all-risk insurer that covers premises, infrastructure around it, and supply chain risks. They expect this service to become more common in the future.

Companies are learning. The earthquake and tsunami in Japan, floods in Thailand, a fire in an Evonik chemical factory, and many other examples show businesses’ vulnerability. Toyota lost half the supply of chips for auto safety control systems and air filters in the tsunami, and Intel lost $1 billion in Thailand. Smaller suppliers can lose everything in similar situations. Zurich and Esri are working together to help businesses protect their investments and avoid huge losses due to natural disasters and the like.

Source: http://www.forbes.com/sites/tomgroenfeldt/2012/05/10/zurich-insures-supplier-risk-as-climate-change-increases-natural-disasters/

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