Nicholas Francis, Chief Marketing Officer, Bryte
The unprecedented pace of technological innovation and resultant shifts in the operating environment – for organisations of all sizes – looks set to continue in 2022. Brokers have always served as the link between the insurer and the customer, and in the context of the fourth industrial era, characterised by the quick pace of technological development and changing landscapes, their role has become more advisory.
Consequently, enterprising brokers can capitalise on this by educating their clients on the myriad of opportunities and risks in the market that needs to be detected early and managed efficiently for their organisations to emerge stronger at the other end. To help facilitate this, Bryte has identified some of the most pressing risks, which South African companies will need to be prepared and insured for.
Brokers need to spend more time getting to know and understand clients’ businesses and risk requirements going forward, because this knowledge will become their biggest asset over the next few years.
Hackers, spammers, and bots
Prompted by the pandemic, fully remote or hybrid working will still be in full force for the foreseeable future. This means that the focus on continuous empowerment of workers to effectively operate digital systems, software, apps, etc. – from anywhere, at any time, on any device and platform – will remain vital in ensuring agility and driving resilience. What this also translates to is more opportunities for hackers to gain access to corporate systems through malicious software or social engineering.
One of the more common ways in which hackers compromise systems is through malicious email links. According to Mimecast’s State of Email Security report, in 2021 already, email threats alone increased by a whopping 64% — growing by a factor of three since the start of the pandemic. Globally, South Africa is now also counted amongst the top three countries with the highest number of cybercrime victims. Interpol’s African Cyberthreat Assessment Report estimates the cost of cybercrime at approximately R2.2 billion annually.
Consequently, IT teams will continue to face immense pressure to educate users, safeguard networks and secure data against evolving cyber risks. They will need to focus more attention on keeping abreast of cybercrime trends to navigate a rapidly increasing myriad of known vulnerabilities as well as blind spots. Moreover, the pressure is multiples more when considering the high administrative fines and punitive repercussions for companies in contravention of the Protection of Personal Information (POPI) Act. For these reasons, comprehensive cyber security measures must be accompanied by insurance covers that respond to the growing range of exposures.
Business unusual thanks to business interrupted
Unsurprisingly, the pandemic and subsequent government action to curb the spread of the virus, have resulted in business interruption levels, across the globe, that one couldn’t have anticipated. The unprecedented, worldwide supply chain disruptions — which is likely to continue in 2022 but at a lower rate — is probably a good example of the extent of such interruption.
Liability cover for SMEs can help protect businesses where they may be held legally liable. An example of such could be a small winery that is unable to meet its targets or delivery dates as a result of supply chain issues. In such instances, the loss of revenue cover for wineries can assist the business with cover for events such as loss of wages — for the period of the interruption, as well as fines and penalties that may be applicable due to such breach of contract.
Locally, critical infrastructure blackouts such as loadshedding or water interruption also compound these dynamics. Arguably, small businesses are feeling the effects of such disruption, the most. Business interruption insurance covers a range of exposures and is an integral safety net in guarding against more predictable risks such as fire (one of the highest ranking), storm damage, infrastructure failure, etc.
Extreme weather turning up the heat
Turning up the heat a few notches is one of the greatest challenges facing all living beings — climate change. For example, the El Niño phenomenon — a recurring climate pattern that results in changes in the ocean temperature — continues to result in above-normal rainfall and flash flooding over most parts of the country, causing significant damage to property and claiming lives. Moreover, new research by the University of KwaZulu-Natal (among others), suggests tropical storms and cyclones may become a more frequent occurrence over the next few years, affecting areas alongside the KwaZulu-Natal coast.
These natural disasters (flooding, mudslides, hail) will undoubtedly continue to have a profound impact on agriculture, infrastructure, supply chains, etc. These will add to the considerable pressure facing people, businesses, key industries and the fiscus. Appreciating this, covers such as crop insurance, household and contents insurance, insurance for goods in transport, and vehicle insurance are among the ways in which businesses and households can remain buoyant.
While the waves of change in the environmental, social and economic landscape may be unsettling, it is important for business to maintain a pragmatic approach to risk identification and management. Through the advice of brokers and specialist support of experts such as risk engineers, businesses can benefit from an expanded awareness of common and emerging risk trends, as well as ways in which to navigate these. This, coupled with the right insurance covers, will place businesses in a much more resilient position, enabling them to maintain steady ground through the storm.