COVID-19 Pandemic has increased India Inc's ’ exposure to a plethora of new risks, many of which implicate the intangible, the Lloyd's of London has alerted,.

According to some estimates,intangible assets such as reputation, human capital and intellectual property are fast becoming an increasing proportion of companies’ balance sheets, accounting for as much as 85 per cent of the total business value across various industries.

With the acceleration of digital business models, amplified by COVID-19 in India, this value could increase much further, becoming a major blind-spot for Indian companies that are not factoring intangible assets into their risk models, cautioned Shankar Garigiparthy, Country Manager and CEO, Lloyd’s India .

As the third most affected nation in this global health crisis, it is critical for Indian companies to be aware of what their intangible assets are and how they can be protected operationally and financially,suggested Garigiparthy.

With unprecedented scrutiny on firms’ behaviour, reputational issues are just one of many posing a threat to Indian firms’ resilience during the pandemic.New ways of working are also presenting unique challenges, amplifying the complexity of managing intellectual property and conduct risk amongst a remote workforce, he elaborated

`Reputation & Brand risks'' can arise while dealing with poor employment practice, e.g. breach of confidentiality by employees and other corporate conduct issues, e.g. due to poor supplier, vetting or insufficient data privacy in activity tracking during remote working.

“Human Capital'' of a business entity can take a hit because of challenges in codifying and sharing knowledge especially in remote working,Insufficient HR(Human Resources) analytics and staff training and education and growing mental health issues.

Last but not the least,“Intellectual Property risk'' can be triggered from factors like increasing pressure from patent trolls,evolving technology to allow reverse engineering of trade secrets and growing online piracy and counterfeiting.

Some Indian companies have started to take active steps in safeguarding their reputation and protect their intellectual property against certain risks, such as cyber-attacks, which have grown significantly due to the pandemic,observed Gargipathy. 

Such exposure to new risks, have presented opportunities for businesses to relook at their business continuity plans and risk management strategy and  Indian companies who fail to factor in intangible assets into their risk models, for example, may face operational and financial difficulties during unprecedented crisis like COVID-19, he explained..

Role of Insurance and Lloyd's market 

In the face of these amplified challenges, the insurance community will play a vital role in helping Indian companies manage these risks so that they are better prepared to protect their assets, he said.

The insurance community will play a crucial role in helping organisations navigate these challenges by collaborating with subject matter experts, data and analytics providers, and insurance capital,he explained.

Gargipathy further highlighted that the Lloyd’s market is developing tailored products and committing resources to help organisations mitigate their exposure to risk and accelerate economic recovery, both unilaterally and in partnership with various stakeholders.

The Lloyd's market, the world's biggest re/insurance market,has been developing products to help companies of all sizes to mitigate their exposure to such risks. In-fact, Lloyd’s recent intangible assets report also brought into focus some currently available products in the market that could help address the risks posed to intangible assets.

Lloyd’s Product Innovation Facility is constantly focusing on innovating products to respond to an accelerated shift towards intangible-driven business models in response to COVID-19.

“Specific to SMEs,Lloyd’s has developed ReStart, a potential non-damage business interruption solution (loss of revenue without a physical damage trigger) for future waves of COVID-19. The solution is focused on giving certainty of non-damage business interruption coverage initially to SMEs by pooling limited capacity across a number of Lloyd’s market participants. The product will support reopening of SMEs, offering a range of limits that ensure it is affordable for customers, without requiring any government support,'' he said..

Lloyd’s is also working on a proposed ‘after the event’ insurance product framework, Recover Re, which would provide immediate relief and cover for non-damage business interruption, including the current COVID-19 pandemic, over the long-term. This framework could be implemented in any country where the government has the resources and industry commitment to support it so we will look to extend this support to Indian companies if applicable.

 In 2018 Lloyd’s Asia signed an MOU with the Intellectual Property Office Singapore (IPOS) to collaborate on training and educational outreach with the aim of raising awareness of IP Insurance promoting Singapore as a centre of excellence for IP rights protection and underwriting expertise.

This collaboration has led to IPOS rolling out insurance backed by Lloyd’s for IP rights holders, the IP Insurance Initiative for Innovators (IPIII). The IPIII provides enterprises with insurance coverage for legal expenses that may be incurred in IP infringement proceedings.