Shankar Garigiparthy, Country Manager and CEO, Lloyd’s India

The COVID-19 pandemic has completely changed the way we live and work. Not only has this unprecedented pandemic caused a humanitarian crisis on a scale the world was unprepared for, but it has also had major economic implications for the world’s economies. It has disrupted working arrangements, global business trade and transformed consumer behaviour. 

With remote working becoming more commonplace, alongside the digitalization of many work processes, the value of intangible assets in a company’s balance sheet has increased exponentially. This has become somewhat of a blind spot for many companies that are not used to factoring the risk of intangible assets into their business models. This is a cause for concern as intangibles assets are estimated to be worth as much as 85% of total business value across various industries.

The current situation has urged businesses to take stock of the new risk landscape and consider reputation, human capital and intellectual property as important tenets of their business model.

For businesses to stay resilient both operationally and financially, awareness of what their intangible assets are and how they can better protect them is critical and must form part of their risk management strategy. 

The pandemic has forced organisations and their employees to embrace new working practices. Social distancing, remote working and the transition towards more digital channels will lead to new challenges. Organisations are expected to not just safeguard the health and safety of their workforce but to also ensure that essential company data is not exposed owing to their employees going into a less curated and controllable remote working environment. 

Many organizations’ approach their reputation challenges in a reactive way after an adverse event occurs. However, it’s important to understand that risk management depends on proactive reputation management. Negative publicity stemming from mismanagement or inadequate preparation can cause significant reputational damage.

These can come from a wide range of both internal and external business issues including employment practices, data management, social issues, corporate conduct, civic responsibility, charitable and environmental stewardship. 

Advancements in cyber-attacks and corporate espionage, along with increasing uncertainty in the business environment have pushed many organisations towards introducing stricter processes to protect confidential and proprietary intangible assets from threats such as intellectual property trademark and copyright infringements, data piracy and appropriation of trade secrets.

With the increasing understanding of the importance of intellectual property as a core business asset, companies must recognise and address these potential threats.

Once the internal mechanisms and management practices have been put in place to safeguard organisations against these intangible risks, insurance cover can play a key role in transferring some of the risk from their balance sheets. Insurance  can also provide additional support in the form of preventative capabilities and resilience, as well as  providing response support after a major incident.

A range of products already exist in the Lloyd’s market  to help organisations manage their risks related to reputation, human capital, and IP, but there are further challenges that the insurance market will have to solve in order to ensure it offers relevant products to support its customers. 

The types of intangible assets organisations should be looking to protect, and the risks impacting these assets are quite diverse. Each risk scenario, therefore, requires a unique set of preventative and response measures. Over the coming months, business leaders will need to explore the following steps in more detail: 

●Assess the total intangible asset value of their business 
●Rate the relative value of different types of intangibles in the organisation; determine which are critical to success 
●Perform ‘war-gaming’ exercises and horizon scanning to test their business’ resilience to risks impacting intangible assets; determine the weaknesses and act on them to prevent risks from occurring 
●Assess businesses’ ability to adequately monitor intangible asset value changes over time and assign each asset a clear risk owner. Consider using corporate partners, such as communications agencies, to further understand risks and value 
●Determine if there are risks that cannot be dealt with within the organisation and evaluate what financial solutions may be available. 

The pandemic has created adversity in many aspects of our daily life, but it has also provided an opportunity to pause and reflect on current ways of working. It’s important that businesses  leverage this critical time and build more resilience in their business models. As economies around the round get back on their feet, the insurance industry will continue to support businesses and communities to manage the risks and uncertainties they face in the future to enable them to recover quickly and be more resilient to future systemic risks. 


Link to the Lloyd’s Report on Intangible Assets: