Lloyd’s has released an advanced summary of remarks to be made by its Chairman, Lord Peter Levene, in a speech to Texas business leaders at the Houston Forum Monday night.
Lloyd’s said Levene would urge industry leaders to “do more to prepare to meet 21st century risks,” citing recent hurricanes, notably Ivan, as a “timely reminder of the risks posed by natural catastrophes.”
His remarks tell Texans that they must not lose focus on the security risks they also face in the 21st century. “There is no doubt Texas is a state at risk,” Levene points out. “With its strong influence in the U.S. economy, the state’s ports, energy industry, high rise buildings and people all contribute to a complex security environment which needs to be managed in a careful and planned way.”
He gave three ways companies need to strengthen their security against the ongoing threat of terrorism:
— More thorough contingency planning
— Improved security
— Closer attention to risk management at the board level
Levene also says the insurance industry was encouraged by the Department of Homeland Security’s focus on Texas, but more needs to be done. A recent industry survey revealed that only 46 percent of U.S. companies are buying terrorism coverage. Levene notes, however, that “the good news is that’s nearly double the number buying it this time last year, but the bad news is that over half of corporations remain uninsured.”
Citing recent reports and surveys suggesting companies are unprepared for terrorist attacks, Levene stresses: “It is clear that companies must invest more – as much in terms of time as money – in contingency planning, to better prepare themselves against the broadest spectrum of security risks we all fear.” He also warned of hazards involving “cyber-security – against computer viruses and hacking attacks by ‘cyber terrorists.'” A recent survey concluded that 40 percent of Western companies do not have adequate plans in place.
Levene calls on companies to improve security by allocating funding, educating employees and implementing appropriate procedures throughout their organizations. “Many companies have improved their security measures considerably since September 11th, but there is still little consistency as security standards vary greatly,” he notes.
Lloyd’s risk experts say improved security is a step that companies can take relatively easily, but which can make all the difference. Underwriters recommend basic security measures such as perimeter control, checking identifications, close circuit TV monitoring, and a greater presence of security personnel.
Levene also emphasizes that while insurance is one important consideration, companies must take risk decisions to the board level for effective risk management in the 21st century. “Companies need to recognize that the risk environment has changed, and they cannot rely on 20th century risk management techniques to solve 21st century problems.”
He concludes by saying, “Without a culture of risk awareness in the boardroom, we cannot truly put our hands on our hearts and say we are ready for the 21st century risk environment.”
In “Notes to Editors,” following the summary of Lord Levene’s remarks, the bulletin noted the following information:
— Lloyd’s conducts more business in Texas than any state in the U.S. with a total of more than $850 million in 2003. Of the 17 Texan companies which rank in the Fortune 500, Lloyd’s insures 13 of them.
— Lloyd’s insures the basic Texan energy infrastructure – both oil and gas – and as the industry develops, Lloyd’s is one of the few markets able and willing to take on the risk. From offshore oilfields to LNG tankers, Lloyd’s plays a vital role in helping Texas manage its energy risk.
— The Department of Homeland Security allocated $32 million to improve defences along the Texan coast – with the Port of Houston receiving the largest grant.
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