Local firms not ready to deal with business risks: Report

SINGAPORE — Local companies only take action to address business liability risks after they experience an incident, according to a survey by QBE Insurance released yesterday.

While almost all Singapore firms have some form of business insurance, including general accident and employee compensation cover, just over half have insurance to cover business liability, said the QBE Singapore Business Liability and Professional Indemnity report.

Based on interviews with 300 companies in Singapore in March and April, the most frequently encountered risks cited by businesses include: Loss of income due to business interruption (24 per cent), business systems and computers hacked (24 per cent) and equipment breakdown (23 per cent).

Other risks mentioned include regulatory or compliance issues (21 per cent), staff injury while working (20 per cent) and payment fraud over the Internet (10 per cent).

Of the businesses that suffered a sensitive data breach, less than two out of three businesses took action afterwards — including buying insurance cover.

Meanwhile, for firms that had their business systems and computers hacked, only half reacted by putting in place control systems, or purchasing insurance protection for such eventualities.

About one quarter of Singapore companies that have experienced customer or payment fraud over the Internet took no action at all.

Another 15 per cent of respondents took no action even after discovering public or third-party problems with their products or services, the corporate insurer’s survey revealed.

“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,” said Mr Karl Hamann, CEO at QBE Insurance Singapore.

“Quite alarmingly, one in five respondents in Singapore said that having business liability insurance has never really crossed their minds,” he added.

Last month, a computer system failure at British Airways (BA) affected around 75,000 passengers, many of whom were stranded over a holiday weekend when the airline was forced to cancel its flights from London’s Heathrow and Gatwick airports.

Separately, in an unprecedented cyber disruption in May, over 200,000 computers across 150 countries were infected by computer virus ransomware WannaCry.

A quarter of Singapore companies reasoned that their businesses are too small and the costs are bigger than the risks, to explain why they did not own business liability or indemnity insurance. Another quarter cited budget issues.

Other respondents said they had other business priorities, or that insurance policies were too complex.

From their responses, local enterprises are more concerned about day-to-day business operations. The biggest challenges faced by companies interviewed in the survey were business profitability (40 per cent), cost reduction (39 per cent), followed by staff retention (37 per cent), maintaining technology and systems (37 per cent), and customer retention (32 per cent).

“Clearly, there’s a gap between what companies view as acceptable risk and what should be protected by business liability and professional indemnity insurance.

“Given current economic challenges and increasing pressure to adapt to new trends, companies need to be sure that they can safeguard their businesses adequately,” Mr Hamann added.