Chubb Survey Finds C-Suite Executives and Risk Managers Disagree on Top Threats To Multinational Business; Few Companies Studying
the Impact of Global Warming
WARREN, NJ, April 25, 2007 - C-level executives and risk managers may not always see eye-to-eye when it comes to the risks associated with international
expansion, according to the 2007 Chubb International Risk Survey. More C-level executives (43%) noted that international risks
pose a greater threat to their companies than domestic risks, compared to only 16 percent of risk manager respondents.
There are also differences in the types of risks that C-level executives and risk managers are most concerned about when it
comes to the companies' multinational exposures. Twenty-four percent of risk managers cited natural catastrophes such as hurricanes
and earthquakes as the top threat posed by a company's overseas business operations or the business it conducts abroad, and
24 percent of C-level executives found terrorism to be the top threat.
"The findings illustrate the importance of an emerging trend toward closer collaboration between an organization's risk manager
and its most senior executives," said Kathleen Ellis, senior vice president, Chubb & Son, and worldwide manager of the Multinational
Risk Group for Chubb Commercial Insurance. "To effectively allocate resources, organizations need a clear, agreed-upon big
picture of global risk-one that's built on many perspectives. Companies that don't take this holistic approach could find
themselves unexpectedly self-insuring losses that occur outside the United States and Canada."
Professional liability evolving internationally
Respondents' perspectives also differed on international trends in professional liability. More than half of C-level executives
(59%) believe that employment practices liability is becoming a more serious source of risk outside the United States and
Canada, while most (55%) risk managers say directors and officers liability is becoming a more serious source of risk.
"These differing viewpoints on employment liability practices and D&O liability are intriguing, and we are keeping an eye
of both issues-especially D&O liability," said Evan Rosenberg, a senior vice president at Chubb & Son and global specialty
lines manager for Chubb Specialty Insurance. "There have already been more than a few significant D&O liability lawsuits in
Europe. In addition, as more countries develop their own insurance marketplace, more of them could make D&O insurance compulsory
or require the purchase of a locally admitted D&O policy to comply with local admitted laws.
"Companies also need to recognize that some corporate governance trends start outside the United States. For instance, many
European countries are taking a more aggressive position on disclosure than their counterparts in the United States on the
global warming issue," said Rosenberg. According to Chubb's survey, only one in four companies (25%) is studying the impact
of global warming on their business. "We have seen numerous shareholder proposals in the proxy statements of U.S. companies
with respect to global warming; however, we have not seen a lot of disclosure from U.S. companies about what they are doing
or their position with respect to global warming."
Global growth continues
"The ability to identify and successfully address emerging international exposures becomes increasingly critical as companies
continue to become more global in nature," said Ellis.
Seventy-six percent of survey respondents indicated that their company is likely to expand its operations outside the United
States and Canada in 2007, and 86 percent anticipated that revenue from these operations is likely to increase over the next
five years. Respondents planned on growing their businesses through a variety of ways, including the introduction of new products
(72%), an increase in employee headcount (66%), opening a plant or an office (62%) and the acquisition of another company
(47%).
Overall, survey respondents identified the following as the top threats to their overseas business operations or the business
they conduct abroad: terrorism (18%), natural catastrophes such as hurricanes and earthquakes (17%), political instability
(13%) and supply-chain failure (13%). In addition, the survey reported that the economic and political forces expected to
have the greatest impact on a company in 2007 include increased competition (23%), rising fuel costs (15%) and the devaluation
of the dollar (14%).
"Today's multinational companies face diverse exposures to risk, and this makes it critical to develop enterprise-wide risk
management programs," said Ellis. "Corporate executives and risk managers must look at all the risks to their business, domestic
and international and whether they are insurable or not, if they wish to more fully protect their business operations."
About the survey
The 2007 Chubb International Risk Survey was conducted jointly in March 2007 by Opinion Research Corporation, a worldwide
research firm in Princeton, NJ, and the Chubb Group of Insurance Companies in Warren, NJ. The Internet survey queried chief
executive, operating and financial officers as well as risk managers at 242 U.S. companies. Summaries of the major report
findings can be found on Chubb's Web site at
http://www.chubb.com/corporate/chubb6893.pdf.
About Chubb
The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property
and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb's
global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.
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