Risk managers need to overcome their blind spot toward intangible assets like reputation and intellectual property, a conference heard.
Speaking at Airmic’s annual three-day conference, Michelle Mason, managing director ar Aon Risk Solutions argued intangible assets is an area where corporate governance is lagging behind.
She said: “When you look at the S&P 500 more than 80% of its value is in intangible assets. From our experience as a minimum there is four times the amount of insurance spend in tangible assets than there are in in intangible assets.”
According to Mason, working alongside leadership teams, with boards and with risk managers is helping to change that focus.
She highlighted that this is achieved by looking at intangible assets, intellectual property, patents, trademarks, trade secrets and know-how, and how this is appropriately protected, identified, assessed and quantified in order for boards to be held accountable for that protection.
Airmic CEO John Ludlow argued the key issue is learning how to manage the assets. He said: ”We’ve got all these assets that companies valuations are underpinned by and we’re not really managing them yet.
“Go back to the old assets of property, we know how to manage our property, we’ve got property management programmes and we know what the hazards are, we know what the likely causes of claims are. We have other assets like reputation, like IP, like data and we’re just starting to learn how to manage these things.
“Only when you manage an asset can you get to the threats and vulnerabilities, and understand what the exposures are.”
Taking reputational damage from a cyber brief as an example, Mark Roberts, property and casualty chief underwriting officer at Chubb argued closing that loophole to a certain extent may mitigate that reputational damage, adding: “If you can quantify risk, you can insure it.”
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