Issue 16 | Q3/Q4 2015
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2015 has seen hugely contrasting challenges to businesses. Terrorism continues to be high on the Boardroom agenda with the UK alert ranked as ‘highly likely’. An attack could affect businesses by impacting supply chains and business continuity, as well as office locations and staff safety.

At the other end of the spectrum, as an industry we’re being faced by more emerging risks, such as how wearable technology fits into current regulations and policy wordings. More cyclists are taking to the roads, increasing the risks faced by business drivers. And in the UK, the current housing crisis has exposed a lack of construction skills, which are very seriously effecting Business Continuity in the construction industry. We briefly cover each of these topics in this edition of Cover Story, but if you would like to discuss any further, we’d welcome your call. Matt Donnelly signature

Matt Donnelly

Managing Director

Griffiths & Armour Insurance Brokers Ltd

Supply chains

Strengthening your weak links

With the global marketplace resulting in far-reaching supply chains, any interruption in the route can have deeply damaging effects.

An graphic representing a broken link in a chain

It is surprising to learn then, that only 11% of UK businesses currently have strong relationships with suppliers at all stages of their supply chain*.

Yet without having a deep understanding of who you are working with, how can you foresee and mitigate problems?

The research by CIPS (the Chartered Institute for Procurement & Supply) also highlighted that a staggering 66% of UK supply chain professionals said they lacked a risk mitigation strategy in the event of a supply chain crisis.

These two statistics alone are incredibly concerning and could have very serious consequences. The good news is that both issues are easy to remedy.

Where relationships are concerned, it’s a simple case of opening proactive, dedicated channels of communication, using technology to ensure transparency.

You should also consider introducing a Supplier Code of Conduct to ensure all links uphold the same standards.

And remember that the relationship is twoway – they could assist in developing risk mitigation plans as they will have greater knowledge of their own risks.

Indeed, the CIPS research showed that those with close supplier relationships up to tier three and beyond were 1.5 times more likely to have avoided a major supply chain crisis in the past 12 months.

This kind of knowledge and control is clearly invaluable, especially in the ever challenging and competitive economic landscape: it enables efficiencies and avoidance of disruption.

Risk mitigation strategies are something that you can develop in-house, once you have knowledge of your existing insurance cover and comprehensive data for your supply chain.

This can vary from understanding different types of risk such as geographical, material, political, environmental and so on, all feeding into a risk register. Once you know the risks, you can put mitigation plans into place.

If you don’t have the expertise in-house, or just feel you would benefit from an expert’s view, our in-house team of Risk Management professionals would be only too happy to help with an independent audit – it’s all part of the Griffiths & Armour service.

*CIPS, May 2015


Understanding Total Cost of Risk

Why we place it top of the agenda

While the concept of TCOR (Total Cost of Risk) is nothing new, a surprising number of businesses still don’t have a handle on it – let alone truly grasp its workings.

And maybe that’s understandable, as it can be quite a complicated beast to pin down. So many aspects of your business practices feed into TCOR from right across your organisation.

Simply put, TCOR is a quantifiable and controllable number that can be identified and then measured. It’s broken down as follows:

  • Insurance premiums (all premiums and brokerage fees);
  • Direct costs (deductibles and uninsured losses);
  • Indirect costs (such as loss of productivity, reputational damage, third part liabilities); and
  • Risk management expenses (including salaries, training and external claims costs).

At Griffiths & Armour, we have an integrated approach to support clients with managing and reducing TCOR, through insurance cover; risk management; and claims management.

A graphic representing the total cost of risk reduction

In essence, we will help you to manage all three effectively and efficiently, driving down TCOR and increasing your control.

By having the insight and control of your TCOR, you can decide upon the best strategy for your business in terms of self-insurance, insurance and risk management investment.

Furthermore, over time you can track how effective each of these are, enabling you to refine your approach and gain even greater efficiencies.

We know how important and influential TCOR is for your bottom line and so do all we can to help you reduce it – not only through continually improving your insurance, risk and claims management, but also by providing advice and support for those aspects of risk you retain.

Whether it’s improved supply chain management, better business interruption planning, or simply driving down direct costs, we put TCOR firmly on the agenda. We hope you will too.

If you’d like to find out more, email us at


A state of preparedness

The impact of terrorism on UK businesses

The UK is on the highest terror alert since the London 7/7 bombings a decade ago, with MI5 anticipating that an attack on home soil is ‘highly likely’.

An graphic showing a magnifying glass over the word terrorism

Subsequently, terrorism insurance cover with wider policy wordings has been developed and more insurers than ever are employing specialist terrorism teams to evaluate risk for every aspect of business.

And while the greatest risk to business is still posed overseas, particularly if you have supply chains in volatile regions, there is a heightened UK risk alert with British radicals being incited to perform acts of terror on home soil. It is imperative to re-evaluable your exposures.

Could your distribution centres be targeted? Do you have assets near famous landmarks? Do you have high profile clients or military, royal, political or religious associations?

And with the increased availability of terrorism cover, there is a greater risk that companies will take on insurance without really understanding what they have.

Cover for key exposures can now be purchased individually, but this is a much more complex area than you may at first think. For example, if a package enters your distribution centre containing a biological weapon, does your terrorism policy protect you?

Just because you have bought terrorism cover, you can’t assume it does. The reality could be starkly different, as most stand-alone terrorism policies outside of Pool Re specifically exclude biological attacks – this has to be bought separately.

And remember, insurance doesn’t remove the risk – it’s simply a mitigation tool. In this unpredictable world, you still need to have informed risk management in place and responsive plans ready to go should the unthinkable happen.

To find out more, email

An image of an Apple watch

One to watch

Wearable technology such as the Apple Watch, smart headphones and jewellery provide forward-thinking technophiles the next level of user interface. Yet, with the exciting new landscape comes unchartered risk and many considerations for both the wearer and insurers alike. The potential for personal and professional data theft is heightened, as well as a greater risk of underinsurance. Inevitably, there will also be a need for legislation to be adapted. It’s currently illegal to hold your phone for calls while driving, but what about checking your watch? The insurance industry needs to be on the front foot in understanding and managing these emerging risks.

A graphic representing a vector drawing of a building

The construction skills gap

With the construction industry under pressure following the recession and current housing crisis, the shortage of skilled workers is compounding these issues even further. Indeed, recent research* showed that lack of skilled labour is the biggest challenge for 53% of construction firms and over half believed the shortage will become even more problematic in the coming five years. The shortfall is causing difficulties in managing projects for 77% of professionals, resulting in delays, increased customer dissatisfaction and broken contracts. Business Interruption cover is an option that can be offered to many construction companies to mitigate some of these issues, while firms themselves can help to manage the risk of skilled labour shortages by taking on more apprentices and employing workers from abroad. To discuss how your insurance can help manage the risk of Business Interruption, speak to your Griffiths & Armour contact today.

*Zurich, August 2015


The rise of cyclist

Making sure you’re up to speed

Health and wellness is a hot topic both at home and in the office. And with greater volumes of traffic on the roads resulting in longer, more stressful journeys, cycling is ever more enticing.

With the current increase of people taking to the roads on two wheels, comes a major risk for businesses to consider, especially in built up areas: road safety proficiency of employees who drive for their job.

The importance of ensuring your drivers have enough breaks and are sufficiently experienced is nothing new. It’s what happens with a claim after an incident where many companies still need assistance.

Where does liability lie for a road accident at work where the driver was at fault? With the driver personally, or with the business?

An image showing a cyclist riding down a cycle lane

In these cases, it’s imperative that the business can show they have correctly checked their drivers’ qualifications; provided proper training; and allowed sufficient breaks and rests between shifts.

If the driver can prove that any one of those hasn’t been fulfilled, liability lies with the company. A charge of Corporate Manslaughter is a very real possibility, although it is as yet an untested area for someone driving for work, instead often being prosecuted under Health and Safety legislation.

Companies need to ensure that these incidents are covered in their insurance cover, should they ever occur.

Without sufficient evidence of any of the above, companies can face costly law suits, as well as damage to reputation. If you need advice on risk management, driver training, or a free assessment of your insurance cover, please contact us.


Insurance market news

There has been increasing consolidation across the insurance industry in recent months, including mergers and acquisitions of both insurers and brokers.

Ace are in the process of acquiring Chubb, and Mitsui are buying Amlin. Both deals will have consequences for the insurance market, as these insurers will inevitably review their product offerings, underwriting approaches and objectives.

In addition, there was the well-publicised pursuit of RSA by Zurich, which was finally abandoned by the latter.

It is clear that with operational and legislative changes, insurers are looking to increase their economies of scale and we’re sure that more activity will follow.

Equally, it has been a busy time in the broking space, with Marsh acquiring Jelf and Howden’s purchase of Perkins Slade.

With this disruption, service levels could be interrupted and we would encourage you to keep abreast of developments – ask your providers how such changes to their business may impact you, both now and in the future.

Griffiths & Armour continues to provide a stable environment for our clients, with regular updates on market changes to ensure opportunities to protect or enhance your insurance programmes are not missed. Please do not hesitate to contact us to discuss further.


If you would like any complimentary advice regarding any of the articles you have read in this edition of Cover Story, please contact us on 0151 236 5656 or

Griffiths & Armour Insurance Brokers acts as manager for the corporate and commercial retail division of Griffiths & Armour. Griffiths & Armour Insurance Brokers Ltd is an appointed representative of Griffiths & Armour which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. © Griffiths & Armour. This document does not present a complete or comprehensive statement of fact or the law, nor does it constitute legal advice. It is intended only to highlight issues that might be of interest to Griffiths & Armour clients; specialist legal advice may be required where appropriate. Where links to third party websites are provided, we accept no responsibility for their content. The LinkedIn logo is a registered trademark of LinkedIn Corporation in the United States and/or other countries.