Businesses today are facing a wider ranging and more diverse set of challenges than ever before. The shifting landscape surrounding the insurance industry, risk management and other segments has required companies to adapt - or fear being left behind.
A number of factors are behind the recent evolution of enterprise risk management, specifically the growing hazard of terrorism, natural disasters and other catastrophes. As a result, today's businesses have to create a more comprehensive risk management plan in order to survive, taking into account all of the new threats emerging on a daily basis.
Terrorism draws additional attention
The recent trends affecting risk management have been discussed by a number of former presidents at the Public Risk Management Association 2014 Annual Conference, which was held in California in early June. As reported by Business Insurance, four past presidents spoke in depth about several of the main reasons why the segment is constantly evolving.
"For me, the most impactful thing was probably 9/11, because it had a lot to do with elevating the attention to business continuity, disaster recovery and risk management," Director of risk management and insurance at the University of Wyoming Laura Peterson said at the conference, the media outlet reported.
The topic of terrorism risk has been part of the public consciousness for some time now. The current Terrorism Risk and Insurance Act is set to expire at the end of 2014 unless an extension can be reached in Congress. Furthermore, political turmoil throughout the world has placed a spotlight on this risk and emphasized the value of proper insurance coverage and hazard mitigation strategies.
Terrorism presents unique risk
Terrorism has been so challenging for businesses to protect against for several reasons, but most importantly it is hard to predict and quantify. An incident is likely to cause significant property damage in addition to its impact on people, and placing a financial value on that loss is a tough task.
According to the Insurance Institute for Business & Home Safety, a risk management plan can address the topic of terrorism, but it requires several unique steps. For example, construction designers have identified ways to strengthen buildings to withstand an attack. Security upgrades to businesses can also be a solid method to mitigate some level of risk. Above all else, a strategy should be specific to the company, location and structure. Unlike a natural disaster, terrorism can be much more targeted, so all the specific nuances of the building - and its people - must be taken into account in order to remain safe.