Page 37 - Insurance Times June 2024

environments, and the interaction between them, have are now intangible, including intellectual property,
fundamentally altered the landscape of BI. While BI networks, platforms, and data. For these asset-light
stemming from traditional physical damage remains a technology-dominated companies, physical damage is
potential risk, the influence of intangible risks is growing relatively less concerning or destabilizing compared to
exponentially. Worst-case revenue loss scenarios are non-physical damage that affects income streams and
increasingly attributed to non-physical damage. For these cash flows.
NDBI risks, the need for material damage as a precondition
3. Change in customer behavior: Over the years, a
for BI becomes irrelevant. significant shift has occurred in how customers and
businesses prefer to access products or services. The
Changing business environment new generation of customers is increasingly

Several factors such as globalization, shift in the business comfortable conducting all their purchases] or service
asset structure, change in customer behavior, evolution of transactions online. The catchphrase for accessing
service and sharing economy are responsible for changing products and services has evolved from "a few meters,
the business environment (see Figure 1). a mile, or a call" away, to simply "a few clicks or swipes"
away. The widespread adoption of
digitalization, e-commerce platforms,
mobile apps, and social media
platforms has driven this
transformation. The demand for
personalized experiences has spurred
the emergence of new business
models such as on-demand services,
subscription-based models, and quick
commerce, also known as q-
commerce.
4. Growth of service economy:
Economies have transitioned from
being solely product-based to
encompassing services, knowledge,
Figure 1: Changing business environment. and experiences. As this evolution continues, new
businesses are emerging with a focus on catering to
1. Globalization: During the last four decades, there has these intangible metrics. In many cases, even core
been a fundamental shift in the corporate landscape product manufacturing companies are embracing
from localized production and consumption to servitization, which involves creating a wrapper of
globalization. In this globalized landscape, companies service or experience around their products. These
have diversified their operations and connected to a companies often generate more revenue from these
web of suppliers and consumers across the world. This wrappers than from their products themselves. The
has resulted in longer and more complex value chains. emergence of connected devices driven by the internet-
Even service-based companies are outsourcing their of-things is further bolstering the business case for the
business functions to other providers worldwide. The service and experience economy.
interconnectivity of businesses, customers, and suppliers 5. Emergence of sharing economy: Advancements in
has led to a significant increase in the risk surface for technology, the growth of online trust, and economic
business interruption. factors have contributed to the evolution of the sharing
2. Shift in asset structure: The assets held by companies economy, also known as collaborative consumption. In
and their valuations have shifted from being this economic system, individuals or organizations share
predominantly physical to non-physical assets. resources, assets, or services directly with each other,
Technology plays a crucial role in this transformation, often facilitated through digital platforms. These
as an increasingly significant portion of business assets platforms act as intermediaries, facilitating interactions

34 June 2024 The Insurance Times