Managing Risk Exposure and Risk-Bearing Capacities During a Disaster

We believe that in this global pandemic caused by the Coronavirus it is extremely important for businesses to put more emphasis on reducing risk where possible. It is believed that the direct and indirect effects of the COVID-19 will result in economic strain, for a sustained period.

Every business should take time to assess and understand the impacts and the exposure of possible losses that they are faced with during these difficult times. In addition, performing a risk-bearing capacity analysis will assist in quantifying the risk exposure and determining the capacity at which an organisation can absorb risk and recover from unexpected losses. In short, the risk-bearing capacity is the financial loss your organisation can withstand without causing financial distress, such as insolvency.

During extremely difficult times, businesses are susceptible to financial vulnerabilities as their risk-bearing capacity is weakened. Sadly, businesses are tempted to reduce or lapse their insurance covers as a way of managing their costs. It is however, argued that it is in these times that businesses should be engaging with their insurance and reinsurance brokers to find tailor made risk solutions to transfer or limit their risk exposures.

With emerging markets currently faced with a more than USD100 billion financial gap, it is expected that the global markets will slide into a recession and most businesses will similarly be faced with significant financial gaps. If risk exposures that are unidentified and/ or unbudgeted for materialise, the effects may be devastating for the business. Therefore, identifying and measuring your risk exposure is indispensable when assessing and obtaining an understanding of the extent of expected losses, as it assists in determining an appropriate response to financing requirements and leads to cost-effective risk reduction measures that can be implemented going forward.

Risk transfer is one of the ways that businesses can employ to manage their unbudgeted risk exposures. In extremely difficult times, risk transfer is generally not an achievable process as most insurance and reinsurance markets will also be reducing their risk exposures. At Maksure, we deploy the power of Maksure global to assist our clients find the right insurance, reinsurance and risk financing structures in these unprecedent times.

About Maksure Risk Solutions

Maksure Risk Solutions is an Afro-Global independent specialist insurance and reinsurance broker with business footprint in Africa, Asia, East & Western Europe, South America, and the Caribbean. We provide innovative and tailor-made risk solutions in Insurance and Reinsurance as well as Risk Financing and Actuarial Consulting geared towards capital management and strengthening our client’s balance sheet. Maksure is also one of the major players in Captive Management (Establishment & Management) in South Africa, Mauritius, Bermuda, and various other jurisdictions. We have access into the Lloyds of London with a deep understanding of African markets. Our global nature ensures that our clients access quality capacity as well as some of the world’s latest thinking and solutions.