Managing uncertainty is a thorny problem within the tech industry
To do that well, you will need to identify, assess and manage all those high-impact financial and reputational threats which could put your operations and activities at risk.
Which is easier said than done as tech businesses face a complex array of legal risks including:
services not being delivered within the agreed time frame
systems not performing as intended
loss of own or customer data
fines and penalties for data breaches
infringement of patent and other intellectual property rights
business interruption incurred by customers
negligent acts of sub-contractors
Added to which are intangible threats, such as loss of commercially sensitive know-how, which are difficult to pin down and transfer to Insurers.
The scope of your insurance coverage is dependent on your Insurers’ understanding of your risk controls, loss prevention measures and active management monitoring.
In other words, they need to know as much as possible about those characteristics that make your business less vulnerable to severe financial loss.
That way technical underwriters will be able to distinguish between good and bad risks and value each accordingly! Without full information they are likely to add more limitations to your Tech Liability, Cyber, D&O and IPR coverage.
The importance of active risk assessment and management
Due to intensifying competition it is increasingly important for tech companies to innovate and launch new digital services, products and platforms at speed.
The danger is that, if you cannot rely on your insurance protection to take over things that go wrong, you may descend into crisis management that stops development for prolonged periods and at great cost.
Threat diagnosis is therefore a vital part of that pre-emptive step in preparing for and managing such incidents before they consume you.
Internally risk management helps improve governance, fosters confidence for customers and security for investors.
Externally risk management will significantly help you to gain more favourable attention, coverage and premium reductions from either existing or new Insurers.
What is risk management?
Definitions vary but we think risk management is a structured process that seeks to identify high-impact risk elements within your business operations and activities, so you can make informed decision about:
controls needed to mitigate key risks
appropriate scope and levels of risk transfer to Insurers
preventing uninsured risks
managing business continuity in the event of serious incident
What risk information do you need to give your Insurers
We think that providing information structured around the following elements is necessary for coherent underwriting:
business ownership, shareholdings and legal structure
specific operation and activities
customer markets that you trade into
international activities
experience and qualifications of management and staff
staff monitoring procedures
document management and record keeping systems
information security
compliance with regulatory requirements
business continuity planning (business recovery)
trading history
past loss history and current claim circumstances
plans for new activities or other restructuring
audit process and financial stability
This not only helps bring your key exposures to the surface, that might otherwise remain hidden, it also enables insurance underwriters to:
make better decisions about providing the coverage that you seek
recognise and reward your commitment to risk management and loss prevention
more accurately price your risks
Not least it will lessen the possibility of your Insurer trying to avoid a claim, in the future, due to non-disclosure of material information.
The most valuable service we offer is our expert "Doublecheck" to ensure that coverage is set up correctly because incomplete information is one of the main reasons for a dispute with your insurers.
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