The big news this week is that Apple has joined the highest echelons of corporate life with a market capitalisation in excess of $500 billion. It is now worth (based on this measurement at least) more than Microsoft and Google combined, or about the same as Poland (GDP $530 billion).
Perhaps, slightly surprisingly is that Apple’s market capital is not based solely on brand. It holds $30 billion in cold cash and $67 billion in long-term investments. It also has hard assets of $138 billion. However, that still leaves $265 billion in intangibles and perfectly illustrates the challenge facing risk managers today and in the future.
Historically, insurance has been purchased to cover buildings, contents, stock, equipment and even traditional liabilities such as Employers Liability of Public/Products Liabilities. This reflected the value of those tangible assets. But as we have commented on elsewhere on our site, these days there is so much more value in intangible assets (such as intellectual property rights and goodwill) than in tangible assets. And insurance just hasn’t kept pace with the change in where the majority of the value lies.
Most risk managers can lay their hands on their “All Risks” material damager and business interruption insurance, but how many have an “All Risks” Intangible Asset Protection? The challenge for risk managers and brokers alike is to design insurance programmes to provide this protection. It may require new tools (like Data Breach coverages, Intellectual Property protection and Cyber Insurance) and new understanding, but if risk managers really do want to live up to their name it needs to be tackled right now.