Small to midsize companies are more likely to experience losses from doing business outside the
The findings were contained in Warren, N.J.-based Chubb's online 2008 Multinational Risk Survey of chief executive, operating and financial officers and risk managers at 212
Among the increasing causes of losses that were found were legal actions against management.
Compared to 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, the study found.
Chubb said smaller companies also experienced at least a 35 percent higher frequency of losses for crimes against and injuries to American and Canadian employees traveling or working overseas.
“Larger companies often have the resources needed to take the global patchwork of different laws and languages, currencies and styles of conducting business and create corporate risk management standards throughout the world,” said Kathleen Ellis, senior vice president, Chubb & Son, and worldwide manager of the Multinational Risk Group for Chubb Commercial Insurance.
She advised, "Small and midsize companies that do business overseas need to look to their business partners to help them create standards that will help reduce foreign property and liability losses and injuries to employees."
Despite the risks, survey respondents reported that their companies will continue to seek additional revenue outside the
Seventy-one percent of the respondents said they expect revenues from foreign operations, foreign sales and/or imports to increase, and three in four companies plan to expand their operations outside the
Companies said they will grow their foreign business 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 respondents indicated their organizations will increase employee travel outside the
Chubb said senior-level executives and risk managers who were polled agreed that the top three threats to their business operations or business conducted outside the United States and Canada are currency risk (23 percent), supply-chain failure (16 percent) and credit risk (13 percent).
In the 2007 Chubb Multinational Risk Survey, the top three threats were terrorism, natural catastrophes and political instability.
This year's survey also found that 39 percent of companies acquired final products and product components from foreign suppliers. Forty-one percent expect to increase the amount of imports in 2008.
Although a vast majority of survey respondents (85 percent) indicated that their companies have not been affected by recent reports of defective products from
One in four respondents are implementing new policies and procedures to qualify suppliers, the survey found.
Companies, Chubb said, are also testing imported products (13 percent) and requiring foreign suppliers to carry product liability insurance in the
The research also discovered that professional liability lawsuits are migrating to Europe and
Nearly one in four companies surveyed said they have experienced a director's and officer's liability, employment practices liability, fiduciary liability, and/or errors and omissions loss outside the
"Countries in Europe and
Mr. Grange said, "Companies of all sizes need to keep a close watch on the evolving foreign legal landscape. They also would be wise to incorporate the resulting professional and other liability exposures into enterprisewide risk management programs."