Business-critical insurance: Identifying those insurances that support the business and its strategy

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The true value of insurance is often only recognised as a consequence of a major loss. At other times, insurance can be viewed by boards and business units as just another cost overhead, where value is judged by securing the lowest premium. Businesses may fail to appreciate the value of insurance in supporting the overall strategy of the organisation and the achievement of its objectives. As a result, insurance can be unfit for purpose and when losses occur, may fail to meet the expectations of the organisation.

This paper proposes that individual insurance covers can be classified as follows:
• Optional.
• Mandatory.
• Business critical.

Designed for risk managers, this paper will describe the three types of cover, set out a framework for categorising individual insurance covers and demonstrate the importance of mapping business critical insurances against the context of key corporate finance thresholds.