Commercial Insurance Profile – July 2022

The Business Case for “Green” Initiatives

The UK’s annual Net Zero Week runs from 2-8 July, highlighting the necessity of environmentally conscious business efforts. Even after Net Zero Week, it will remain key for organisations to commit to helping the UK move towards its 2050 goal of reducing carbon emissions by 100% compared to 1990 levels.

Furthermore, beyond recognising Net Zero Week and working towards the nationwide goal, it’s also necessary for employers to understand the ramifications of climate-related risks as they pertain to their businesses. These potential consequences include:

Operational disruptions—Organisations may have to pause operations due to climate-related disasters.
Supply chain issues—Climate-related events can affect delivery schedules and resource scarcity.
Labour concerns—Global warming has led to labour struggles among various industries, such as those relying heavily on outdoor workers.
Regulatory uncertainty—As governments and regulatory bodies address climate change through various initiatives, organisations must maintain compliance with all applicable regulations and laws.
Reputational damages—Organisations neglecting to take their environmental impact seriously may struggle to maintain a good reputation among both stakeholders and the general public.

To make progress towards net zero emissions and protect themselves from climate-related risks, organisations should consider the following steps:

Assess natural disaster exposures. Be aware of natural disaster risks. Based on location, organisations and worksites may have different exposures to consider.
Address climate change risks. Consider physical, transitional and liability risks related to climate change, such as those related to industry standards, product offerings, daily operations and sustainability.
Acquire proper cover. Secure appropriate insurance and protection against climate-related risks by consulting a trusted insurance professional and discussing specific needs.

For additional risk management guidance, contact one of our Client Directors today.

Plan for Ongoing Supply Chain Disruptions

Consistent and reliable access to necessary resources is imperative for organisations to maintain regular operations and provide optimal services and products. Supply chain issues can lead to significant financial and reputational losses.

In recent months, organisations in the UK and around the world have faced a number of issues affecting supply chains, including labour shortages, transport delays and a lack of materials. These problems have been exacerbated by rising demand for various products, such as consumer goods and construction materials.

With these challenges in mind, employers need to assess and address any potential shortcomings regarding their supply chain processes. Consider the following steps:

Choose suppliers carefully, and conduct regular audits and inspections to ensure their commitment to preventing business interruption matches your own.
Verify suppliers’ insurance cover.
Define contract scopes clearly with the assistance of specialised legal professionals. Consider indemnification, hold harmless and defence agreements.
Re-evaluate worksheets regularly to account for global events, changes in the market or your business model. Consider the threat of developing risks, such as cyber-warfare and climate change.
Establish formal plans to be implemented in the event of supply chain issues. These may include a business continuity plan, geographical diversification of servers, relocation plans and the utilisation of alternate suppliers.
Investigate the versatility of supply chain partners. Some may have multiple locations and be better equipped to maintain operations in the event of a disruption.
Transfer risk by working with an insurance broker to understand your exposures and acquire appropriate cover.