Crisis Management Solutions Michael Lincoln Underwriting Manager – Asia Pacific 6 December 2011

Crisis Management Case Studies Analysis

A “Typical” Crisis For any one individual company, very rare Real time events, limited time frames with limited information Highly stressful Financial impact often severe

A “Typical” Crisis Two main risks: –The incident itself –The handling of the crisis

Case Study 1 Beverage manufacturer $2.1m extortion letter One person seriouslly ill from consumption 40,000 cases of product recalled

Case Study 1 Colour of bottle caps changed Decreased sales for subsequent 12 month period Loss ~ A$ 12,000,000 –Loss of profits –Replacements Costs –Recall costs –Rehabilitation Expenses

Case Study 2 Tylenol Potassium cyanide poisoning 7 deaths 31m bottles recalled

Case Study 2 Market share collapsed from 35% to 8% Introduction of tamper evident packaging High level of communication Sales rebounded within 12 months Losses of ~ US$100m

Case Study 3 Pasta manufacturer Strong Quality Assurance plan in place High salt content product Eroding metal conveyor belt

Case Study 3 Metal pieces found in product by multiple products Losses ~ A$5m

Case Study 4 Kidnap of CEO 5 people involved Held for 13 days Media reported ransom of $18m paid

Case Study – other losses ProductAnnual SalesLoss Pre-prepared meals$12m$1.4m Beverage$9m$1m Snack Food$6m$250k Dessert$1.5m$100k

Analysis All cases different, no one model Transparency & communication with stakeholders Long term financial impact closely correlated to brand reputation

Analysis Two most common results: –Used as an opportunity –Handled poorly Usually linked to the handling of the incident

Presented by Liberty International Underwriters (a trading name of Liberty Mutual Insurance Company ABN Incorporated in Massachusetts, U.S.A. The liability of members is limited). The presentation is intended to illustrate broadly some, but not all, of the kinds of exposures a business can face from Cloud Computing. It is not a comment upon insurance coverage available from LIU. It should not be relied upon as advice or any definitive statement of law or the principles of insurance in any jurisdiction. This information is accurate as at 5 December 2011.