COVID-19 brings intangible assets into full focus

Intangible assets are an increasing proportion of companies’ balance sheets, already accounting for as much as 85% of the total business value across industries according to estimates. With the acceleration of digital business models, amplified by COVID-19, this value could now increase much further, becoming a major blind-spot for firms not factoring intangible assets into their risk models.

Lloyd’s, the world’s leading specialist insurance and reinsurance market, today published a report in collaboration with KPMG urging businesses to pay attention to the new risk landscape that has evolved under COVID-19. Protecting intangible assets: Preparing for a new reality looks at the increasing value of intangible assets, and the role of risk managers and the insurance industry in protecting them.

COVID-19 has disrupted global supply chains and moved the world towards de-globalisation. It has changed working arrangements, businesses’ ability to trade, and consumer behaviours. It has also created a new social contract between businesses and society and has accelerated underlying market trends such as the shift to remote workforces and digital transactions.

The new report looks at how COVID-19 has increased companies’ exposure to new risks, many of which implicate the intangible assets held by businesses. With unprecedented scrutiny on firms’ behaviour, reputational issues are just one of many posing a threat to firms’ resilience during the pandemic. New ways of working are also presenting their own unique challenges, amplifying the complexity of managing intellectual property and conduct risk amongst a remote workforce. For businesses to stay resilient, operationally and financially, awareness of what intangible assets are and how they can be protected is critical and must form a considerable part of their risk management strategy.

In the face of these amplified challenges, the Lloyd’s market is developing products to help organisations mitigate their exposure to risk, and the report outlines a range of examples of products already available in the market in response to the risks posed to reputation, human capital and intellectual property. It highlights the vital role the insurance community has to play in helping organisations manage these challenges so that they are better prepared to protect their assets.

Dr. Trevor Maynard, head of Innovation at Lloyd’s said: “As an industry we need to recognise that the world has changed and adapt to how it looks now. COVID-19 has changed the risk landscape, exposing companies to new risks and encouraging companies to think about how they now operate. Whilst a range of insurance products already exist to help organisations manage their risks related to reputation, human capital, and intellectual property, it is important that at Lloyd’s we work together with the market to innovate and create new products to help customers mitigate risks and protect themselves from future threats.”

Paul Merrey, partner, KPMG said: “As we move swiftly into the new reality, it’s apparent that many businesses aren’t adequately prepared for it. The key drivers of corporate value are completely different now to in the past, and this shift has only been amplified by COVID-19. Whilst physical assets are still a focus, recognition of what intangible assets are and how much they represent a firm’s value may come as a hard awakening for some organisations. In order to remain resilient and competitive, organisations across all industries must be proactive in finding new ways to enhance their business practices to protect these assets, and this will require a new way of thinking and acting.”

Notes to Editors

The report is part of a thought leadership series that was launched by Lloyd’s on 1 July: “Supporting global recovery and resilience for customers and economies: the insurance response to COVID-19” and looks at the ways in which Lloyd’s and the global insurance industry can respond to protect customers against future systemic risks.

Protecting intangible assets: Preparing for a new reality will be launched at the InsTech London event: Intangibles: Reputation, Human Capital and IP. New solutions for New Risks on 6 August. Matthew Grant, Partner at InsTech London will discuss the themes of the report with Trevor Maynard, Head of Innovation at Lloyd’s, Kasper Ulf Nielsen, Chief Strategy Officer at The RepTrak Company, Paul Merrey, Partner at KPMG and Josephine Saunders, Accelerate Partner at AXA XL.

 

The French version of the release is available here

The German version of the release is available here

The Italian version of the release is available here

The Spanish version of the release is available here