In a challenging environment full of new and complex exposures, financial institutions can leave no stone unturned. The impact of the COVID-19 has been felt across the entire industry as organizations continue to search for answers. One of the most effective solutions to these adverse effects of the pandemic can be utilizing insurance. According to a survey from Chubb, two-thirds of financial institution executives believe risks will increase in the next 12 months. Those same executives also believe mitigating these new risks will be of extreme importance. There are several insurance products organizations should consider to protect themselves throughout this difficult situation.
Organizations across all industries run the risk of becoming the victim of a cyber attack. Schemes like ransomware and phishing pose a significant threat, especially during the COVID-19 pandemic. According to the Chubb survey conducted in Q2 2020, 44% of executives found cyber risks to be an extremely challenging task. Maintaining appropriate cyber coverage and practicing cyber hygiene will be vastly important going forward.
Legal, Regulatory and Compliance
Financial institutions are continually met with legal, regulatory and compliance challenges. These challenges include various legal and regulatory risks such as protecting confidential customer information and intellectual property, adherence to consumer protection and environmental laws, and enforcement of employment regulations. Integrating appropriate insurance coverage to mitigate these unique risks is essential.
Volatile Business Environment
Financial institutions are continually offering new and innovative products to their customers. However, while these products are useful for consumers and good for business, they also present many new avenues for lawsuits. This is exasperated by plaintiff-friendly legal decisions and larger jury awards.
Additionally, the banking and financial services industries are the number one victims of employee fraud. Employee fraud typically results in the loss of five percent of revenue for the average organization as well as reputational damage, increased regulatory scrutiny and business disruption. Several insurance products, such as D&O (Directors & Officers) and Umbrella, can help mitigate some of these risks.
Business disruption can cause downtime, which can be devastating to an organization’s reputation and bottom line. The use of extra expense dollars should be relied on to get an organization back up and running as quickly as possible.
Additionally, a disaster recovery plan that contemplates data center continuity, property recovery efforts and other critical aspects of your business should be leveraged to minimize the impact of a catastrophic event.
The COVID-19 pandemic has made a challenging environment even tougher for financial institutions. Using insurance as a tool can help minimize risk and loss to maintain strength and stability during this difficult time. Talk to your trusted RCM&D advisor today for more on what insurance programs are appropriate for your unique risk profile.