Telecoms Trade Disruption Insurance A Different View On Revenue by Graham White
of cable that transports it. Cables can break or be disrupted by other means, and loss of data flow can be instantaneous and without warning. Even with improved geographic diversity, government intervention and a heightened awareness in the industry, cable network safety remains a major issue and has the ability to seriously impact on commerce and security on a global scale. On this fragile infrastructure rests the performance and profitability of many companies who are tied to the reliability of submarine cable systems. Firstly the providers and operators of capacity, their receivers or carriers and in turn their clients or sub-carriers down the supply chain. Whichever way you go upstream or down all parties can stand to lose in the event of failure. Even if the physical infrastructure remains sound the demise of a key company within it can cause equally telling damage and this can reverberate through a network. Financial consequences have the potential to be very costly, effecting revenue stream, market share, client relationships and ultimately shareholder confidence.
In this increasingly interconnected and complex world the threat of business interruption on vital supply industries is of growing concern for the companies that offer these specialist services and for those that rely upon them.
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Supply networks today are now truly global and sophisticated but rely on strong partner relationships and continuity. This equilibrium can be disturbed by many factors. Current economic conditions, fierce competition and unstable geo-political tensions only further
threaten the stability between supplier and customer. The fibre optic cable industry offers a prime example of where supply balances and the potential for disruption are particularly acute. Most of the world’s data traffic passes trustingly through submarine cables and the companies that distribute, own and derive income from this flow of data are totally reliant upon the physical wellbeing of the thousands of miles
Such critical exposure which threatens loss of income, the ability to deliver and ultimately survival in such a competitive market should put pressure on companies to focus more strictly on their risk management strategy, and whenever possible take action to reduce or remove exposures. If business continuity planning cannot risk manage these risks down to an acceptable level – and one that the company is comfortable retaining on its balance sheet - then risk transfer becomes an attractive and reliable option. Not surprisingly many companies are open to exploring new and innovative insurance