You cannot predict a disaster – but you can protect against it

It is not possible to predict a catastrophic event. In order to prevent devastating financial losses in the event of an unpredictable event, corporates are urged not to become complacent when it comes to protecting their businesses.

This is according to Anwa Adams, Manager: Corporate Sales at Lion of Africa who says that 2011 was reported to be the costliest year for natural disasters in South Africa’s recorded history, with economic losses amounting to over R160 billion due to flooding alone. Adams says that these losses once again highlight the importance of companies preparing for catastrophes well in advance.

“A catastrophe is an extensive and widespread event which results in large scale loss and damage to property and life, adversely affecting business operations. Catastrophe cover provides indemnity against such disasters to ensure continuity of business. The absence or inadequacy of catastrophe cover could result in gross financial loss or even worse, closure of the affected organisation,” says Adams.

According to Adams, catastrophe protection includes insuring key employees against accidental death and/or injury. He warns that companies need to be prepared for sudden calamities whereby valued employees die in accidents such as plane or car crashes. Adams refers to the tragedy where the CEO of Italtile Ltd, Gianpaolo Ravazzotti and eight of his colleagues and business partners died together in a plane crash.

“It is tragic and unpredictable accidents like these that highlight the severe impact loss of employees can have on a company’s operations, as it could take months before suitable replacement candidates are found,” says Adams.

According to Adams, it is the broker’s duty to ensure that the client has adequate and appropriate coverage for their assets. He says risk management solutions that identify, assess and mitigate risk and exposures should be carefully explained to any business owner.

According to Adams, some of the most common risks for corporates include; loss or damage to the insured’s property caused by fire, storm, wind, water or earthquakes etc. – as well as Business Interruption losses following therefrom. Additional covers will include theft, money, goods in transit, commercial crime, personal accident etc.

“It is not possible to predict when these risks may become a reality and it is too late to react once they have occurred. With the correct levels of protection in place, businesses can ensure that damaging effects of catastrophes and interruptions are mitigated,” he says.