Understanding Modern Business Risk Alongside the World’s Best

As one of the world’s premier insurance brands, Marsh has long been viewed as a company with all the answers. But as modern risks continue to morph and change, there is a need to stay up to date, and Marsh has that ability. New markets, new tools, and fresh ideas are helping to keep this powerhouse at the cutting edge of the market.

Recognised the world over as one of the biggest and best names in risk management and insurance, Marsh McLennan is a powerhouse with more resources, more insight, more history, and more global presence than almost any other company in the space. The combination of Marsh, Guy Carpenter, Mercer, and Oliver Wyman makes for a formidable offering and portfolio which has supported clients, both private and commercial, for decades.

In Africa, the group has strong interests across the continent acting as a leading risk advisor and insurance broker. With tens of thousands of people around the world, in 130 countries, Marsh’s differentiator is that it still understands the local conditions in the markets that it operates in. Whether it’s climate risk in East Africa, infrastructure breakdown in South Africa, or political risk in West Africa, the company – and the group – has feet on the ground delivering expert insight, advising clients appropriately on the risks that face their business or personal circumstances.

But even with local insight and world-class products, risk is a constantly changing element that must be monitored closely to ensure a reasonable response.  

MOROCCO EXPANSION

After historic success in South and southern Africa, there has been a push to take market share in other parts of the continent with strong economic conditions and healthy underlying indicators.

In November 2022, Marsh announced that it would acquire the remaining share of Beassur Marsh, a leading insurance broker in Morocco. Following the acquisition of an initial stake in 2019, the new deal will see Marsh grow its presence in North and West Africa.

When the deal finalises, the new entity will be known as Marsh Morocco and current CEO Mehdi Tazi will continue, supported by Anis Safraoui, Head of North and Western Africa and other regional leaders.

Christos Adamantiadis, CEO, Middle East and Africa, Marsh, said: “Following our successful investment three years ago, we’re excited to acquire a majority stake in Beassur Marsh as we continue to develop our expertise and support our clients in the Moroccan insurance market. The combined business will enable us to invest further in the business and set a new standard for insurance and risk advisory services in North and West Africa.”

The changing nature of risk has encouraged expansion into new markets as clients are desperate for a deeper understanding of new risks. Whether emerging from technology or innovation, or from changing threats from climate or societal instability, the need for intelligence and data is growing.

MODERN RISK

Marsh has identified a number of risks that are currently being overlooked, especially for businesses. The company conducts research across all industry sectors and local specialists quickly gain intuition around where the group could bring a solution. 

Three key concerns for African leaders to mull are climate, trade credit, and cyber security.

Scott Williams, ESG Coordinating Director for Marsh MEA, says that the well-documented implications of climate change such as rising sea levels, extreme weather events, loss of habitats, and more are an existential risk to society. But risks to business, categorised as transition risk and physical risk, have not been adequately addressed by many. Transition risks involve business-related elements such as technology and reputation. With little data available for a long-term energy transition from an insurance perspective means that choosing the right cover can be hard. Physical risks involve acute and chronic pain points, such as the acute devastating floods in KwaZulu-Natal last year. Chronic pains develop as a result of much longer-term changes which are not yet fully understood and often do not have policies developed to support. Almost all companies in the Middle East and Africa will not have the resources to understand these risks in depth, and so partnering with a expert is essential.

“While many forward-looking companies in the region are already taking action to reduce their impact on rising temperatures and boost their resilience, the specific timelines and exact outcomes of the evolving climate change threat remain unclear,” says Williams.

“The interconnected nature of economies, sectors, and global markets means that your MEA business will likely be impacted at some point in the near future,” he adds.

A more recognised risk is non-payment or missed payment from customers. Typically a more understood risk for businesses and insurers, there are many products in place to mitigate. With bleak economic outlook for South Africa and other countries in the region, the expectation from most is that bad debt figures may rise with SMEs bearing the brunt. Trade credit insurance from Marsh protects against this risk and offers a number of associated benefits. Improvement in cashflow, allowing for exploration of new markets, increasing sales volumes, and reducing the risk of insolvency are all achieved with the right cover. But finding the right cover is critical.

“Amid slower global economic growth, high energy prices, inflation, and higher interest rates, companies in the Middle East and North Africa are increasingly at risk of delayed payment or non-payment by customers based either in the region or in the UK, Europe, US, and Latin America where late payments have spiralled out of control in some sectors,” explains Milind Jain, Marsh’s Credit Speciality Leader, Middle East and North Africa.

“In order to protect themselves against bad debts, information is key. Companies should lean on their insurers and relevant information providers such as trade associations and professional bodies to perform due diligence on partners ahead of providing them with goods and services.

“Companies should consult a broker to make sure they have the most suitable insurance coverage in place and are taking all measures available to mitigate their trade credit risks,” he says.

CYBER THREAT

Perhaps one of the most important risks that Marsh has identified for businesses is the complete lack of protection against cyber-attacks. Not a new phenomenon, many find it puzzling that companies of all shapes and sizes are still so exposed to cyber threats, and many have little or no plans in place to handle such a problem. Whether it’s theft of data, ransomware, extortion, financial loss, or something different, cyber-attacks are one unwelcome element of the still blossoming digital age.

In a report prepared by Marsh and Microsoft, statistics suggest that just 4% of businesses in the Middle East and Africa are confident in their organisations ability to deal with cyber threats.

“The vast majority of organisations are still struggling to understand the risks posed by their vendors and digital supply chains,” says Christos Adamantiadis.

He highlights the UAE where over the past few years there have ben more than 166,000 victims of cybercrime, representing a combined loss of more that US$745 million. For businesses. The report also found that 37% of businesses had no insurance related to cyber risk, and few were implementing enterprise-wide solutions that incorporate all teams and not just the IT department.

“Executives’ confidence in their organisation’s core cyber risk management capabilities – including the ability to understand and assess cyber threats, mitigate and prevent cyber-attacks, and respond to attacks – remains a major concern,” details Adamantiadis. “Indeed, 60% of respondents stated that they have not even conducted a risk assessment of their vendors or supply chains.

“Given the accelerated growth in the complexity and scale of cyber-attacks in the MENA region over the past few years, these findings are particularly troubling. The toll of almost three years of unrelenting workplace disruption, digital transformation, and ransomware attacks does not yet appear to have made a significant impact on the way that business leaders think about risk. This is surprising given the nature of a series of high-profile events.

“Every business, everywhere and no matter their size or sector, must act now to protect themselves, their supply chains and the wider economy,” he highlights.

“Modern-day cyber incident response plans should be refreshed, with a new focus that takes into account evolving forms of cyber-attacks, such as ransomware, and the increased sophistication of cyber attackers,” adds Marsh Africa CEO, Spiros Fatouros.

Thankfully, Marsh and the wider Marsh McLennan Group is well-positioned to guide clients on a lasting journey that will allow for deep understanding of risk, and plan to mitigate that risk wherever possible.

Gone are the days of a business thinking only about products being stolen or accidental fires on premises as their main danger. Even for small businesses, the picture is now much more complex and a global partner with local knowledge is a great asset.

Marsh is as experienced as they come. “No longer a company of companies, we are one enterprise with four global businesses that are taking on the great challenges of our time—together,” the company says.

“Our Purpose has never been more important or more relevant: We make a difference in the moments that matter. We do this best when we bring our collective expertise to meet the most complex challenges that our clients and society face today.”