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How Captives Can Cut Supply-Chain, Cyber Insurance Costs

Chief financial officers of corporations that have already set up captive insurance companies or are thinking about setting one up should ponder the benefits of self-insuring cyber perils and supply chain business-interruption risks via a captive to supplement commercial insurance coverage.

Indeed, the financial risks to companies from cyber attacks are increasing at an alarming rate, according to recent research by McKinsey & Co. Similarly, many smaller companies may not have adequate contingent business interruption insurance coverage.

Adding comprehensive or supplemental cyber risk and BI coverage through a captive should be considered an important contingent component to any company’s strategic risk management plan. These risks are real for most companies, and the potential damages to a company’s revenues and profits can be significant.

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