Chubb Survey finds smaller companies more likely to experience loss overseas

Small to midsize companies are more likely to experience a loss to corporate assets outside the U.S. or Canada, according to Chubb’s 2008 Multinational Risk Survey. Compared with companies with annual revenues of more than $1 billion, smaller companies experienced at least a 50 percent higher frequency of foreign losses during 2007 for liability lawsuits, theft of intellectual property/piracy and theft of goods in transit. Smaller companies experienced at least a 35 percent higher frequency of losses for crimes against and injuries to American and Canadian employees traveling or working overseas.Seventy-one percent of survey respondents expect revenues from foreign operations, foreign sales and imports to increase. Three in four companies plan to expand their operations by introducing new products (71 percent), increasing employee headcount (62 percent), acquiring another company (47 percent), and increasing the amount of imports (41 percent). In addition, 68 percent of organizations will increase global travel. Senior-level executives and risk managers agreed the top three threats to business operations or business conducted outside the U.S. and Canada are currency risk (23 percent), supply-chain failure (16 percent) and credit risk (13 percent). Thirty-nine percent of companies acquired final products and product components from foreign suppliers; 41 percent expect to increase the amount of imports in 2008.

Although 85 percent of respondents have not been affected by reports of defective products from China and other countries, 41 percent are taking action to avoid a products liability event. One in four are implementing new policies and procedures to qualify suppliers. Companies are testing imported products (13 percent) and requiring foreign suppliers to carry products liability insurance in the U.S and Canada (10 percent). Fewer companies have halted importing certain products and components or have changed or stopped using foreign suppliers.

Nearly one in four companies have experienced a directors and officers liability, employment practices liability, fiduciary liability, or errors and omissions loss overseas.