At a glance
- Almost all businesses, regardless of their size, now have some international element to their operations
- When expanding operations overseas, risk management needs to be a key consideration
- Zurich International Programmes can provide customers with ‘boots on the ground’ assistance, both pre- and post-loss, anywhere in the world
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With a growing number of businesses pursuing international expansion or managing increasingly complex international supply chains, the need for international programmes to manage and transfer risk is more important than ever.
How businesses are becoming more international
Kevin Parker, Head of Customer Management (EMEA), Zurich, says: “Perhaps the most common way in which businesses are becoming more international is the increasingly complex supply chains that most now rely on. These extend far beyond country borders and can create dependencies where once they did not exist, threatening business resilience.”
While international supply chains are an essential feature of modern trade, they can be difficult to negotiate. Kevin explains: “What’s commonly not considered – particularly at medium-sized businesses without a dedicated risk manager – is the risk that lies beyond immediate suppliers. What happens if your supplier’s supplier fails?”
Modern supply chains can involve lots of moving parts, requiring contingency plans should one link fail. Businesses introducing international elements need to understand and quantify these risks and put in place robust strategies to mitigate them.
Many medium-sized businesses are also establishing physical bases overseas. Kevin explains: “Many of our customers are choosing to locate their operations closer to their global markets, which can then provide challenges in terms of maintaining well-developed management standards and associated brand protection.”
The risks international elements can introduce
Whether extending international supply chains or setting up physical operations overseas, international operations can open up new risks.
“International growth can introduce everything from natural catastrophes to political risks that businesses may not have encountered before,” explains Kevin. Whereas in the UK natural hazards are typically limited to flooding, international expansion can introduce everything from earthquakes to cyclones.
There are also different regulatory environments to consider. Managing regulatory and tax differences from territory to territory can be complex, and it is important that businesses don’t contravene local rules and regulations when operating overseas. Zurich’s Multinational Insurance Application (Zurich MIA) is a global regulatory and tax database, designed to help organisations stay compliant.
With sprawling supply chains spread all over the globe, many companies will also be required to manage new and varied political risks, ranging from instability to industrial action. Zurich Risk Room is a risk assessment tool that analyses political, environmental, economic and social risks in more than 150 countries.
Kevin adds: “There will also typically be very different approaches to things like health and safety when operating abroad, particularly when leaving the EU bloc. Working with local contractors on build projects can present particular issues when trying to ensure that protection standards are aligned with domestic approaches.
“Ideally, customers will approach Zurich at an early stage. We can then work with the customer, broker and suppliers to establish the most pragmatic approach to the territory in question.”
Simplifying the process with Zurich risk engineering
“It’s really a combination of the technology and the people that helps Zurich stand out from the rest of the market,” explains Kevin.
“Zurich has a global network of 800 risk professionals, able to provide customers with ‘boots on the ground’ support. Field engineers are embedded in local territories and have a deep knowledge of regulatory environments, working cultures and language.”
For international programmes, a dedicated account engineer will be appointed as a single point of contact – allocating assignments, ensuring consistency of approach and coordinating field engineers locally. They will provide risk management guidance to customers, ranging from loss trends that might affect supply chains, to fire protection onsite.
This coordinated approach, combining ‘boots on the ground’ support with Zurich’s global network and a dedicated point of contact, can help identify and manage risk, pre- and post-loss.
Kevin explains how Zurich supported a customer who was about to open a hub in Australia. “They had already selected a site,” says Kevin. “However, following a visit and discussion with a field engineer, a number of problems were identified, including the terrain, utilities access and distance from local fire brigades. The decision was made to open in a different location in the same city, significantly reducing the risks.”
Increasing transparency and flexibility
Flexibility and transparency are essential for managing international risk pre- and post-loss, and ensuring effective collaboration between Zurich, broker and customer.
As Kevin explains: “We routinely share our reports and data with our customers, often using self-service platforms such as My Zurich, which provide 24/7 access to key data and information. This enables two-way communication with our customers on risk improvement and provides key metrics and benchmarking.”
When introducing international elements, initial self-assessments can also be important for reducing risk. The Zurich Risk Advisor app is designed to help customers undertake their own assessments on smaller locations, enabling users to plot how risk improvements can improve risk quality scores.
For more information on the issues discussed in this article, please get in touch with your local Zurich contact.