Singapore firms fail to be proactive about risks

Singapore

QBE Insurance's The Risk of Regret report revealed that the top three risks encountered by businesses in the past 12 months were loss of income due to business interruption, business systems and computers getting hacked, and equipment breakdown.

Yet, despite being acutely aware of such risks, many Singapore companies tend to take the reactive rather than proactive approach - addressing such risks only after experiencing an incident.

Other risks experienced included legal, regulatory or compliance issues, staff getting injured while working, and customer or payment fraud over the Internet.

The report, which is based on interviews with 300 companies in Singapore in March and April 2017, focuses on current and future business challenges and opportunities, as well as how well-equipped companies are in tackling risks.

QBE Insurance Singapore chief executive Karl Hamann said this phenomenon causes companies to jeopardise the stability and continuity of their businesses.

In fact, the tendency to be reactive rather than proactive is commonplace among various types of risks.

Additionally, Mr Hamann noted that "several respondents also said that they took no action even after an incident".

"Given the risks and challenges, it's also surprising that companies are not doing more to shield themselves through business liability and professional indemnity insurance," he added.

When questioned about the reasons companies did not own business liability or indemnity insurance, he said the more prominent reasons cited were costs outweighing the risks, budget issues and other business priorities.

Also, one in five respondents indicated that they never considered having business liability insurance.

The significant challenges companies are currently confronted with include business profitability, cost reduction, employee retention, maintaining technology systems and customer retention.

The future for potential risk could be contingent on three trends that respondents indicated were paramount to their business in the next 12 months - technological innovation, continued business slowdown and rising expectations for personalised customer services and products.

Mr Hamann pointed out that there is a distinct gap between what companies perceive as acceptable risk and what should be safeguarded by business liability and professional indemnity insurance.

He said: "In an increasingly litigious world, with professional liability high on the agenda, there is an obvious concern that Singapore's companies need to be doing more to protect themselves and their customers."