Managing Key Risks in Africa: "Don't Forget the Basics"

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Commercial Risk Africa met Smita Malik, of Clements Worldwide, who warned that risk managers must remember the essentials when designing risk management policies for Sub Saharan Africa.

Africa is an exciting place to do business and brings with it some unusual risks. But Smita Malik, Assistant Vice President of Programmes and Special Risks at specialist expatriate insurer Clements Worldwide, warns risk managers must not get carried away with the ‘sexy’ risks and forget the basics.

Too often risk managers wanted to talk about political risk cover, expropriation, civil commotion or terrorism when the greater risks actually lie closer to home. “I’m not saying these should not be covered,” Ms Malik said. “But there are some things that risk managers sometimes forget which are likely to result in a constant stream of claims.

“Political risk events are much rarer and will be extremely costly when they happen but the day-to-day risks must not be ignored.

She has four main areas of concern:

ROAD ACCIDENTS: “We see a lot of claims relating to road accidents,” she said. The risks vary from country to country but areas where the law is not strong are a particular threat. Drivers will not be qualified and their vehicles may not be roadworthy, both adding to the risks for companies operating in these countries. Road accidents are extremely common across Africa and, particularly in remote areas, access to emergency help can be difficult.

CRIME: A lot of operations are headquartered in either Kenya or South Africa, both of which have problems with crime. Companies must ensure their operations are protected sufficiently against a constant threat of theft. Stock is at risk but so are company computers and vehicles, for example.

EMPLOYEE BENEFITS: “When you have an employee working in these areas, there is always the possibility of that person being caught up in an event—whether that is a road accident, crime or, more likely in north Africa, a riot or civil commotion,” Ms Malik warned. “There is always a risk of your employee being caught up in something as an innocent bystander and you must make sure they are properly covered—and that the firm is too.”

MEDICAL: Most of Africa has fairly basic health facilities, Ms Malik warned, saying that in many cases, employees would need to be expatriated to either Kenya or South Africa as a minimum. She suggested risk managers need to be aware of exactly where employees are operating and where the nearest access to medical facilities would be. Risk managers need a protocol in place to evacuate sick or injured employees.

Overall, she said, risk managers must go that extra mile to protect operations in Africa.

“Too many people,” she said, “rely on their insurance policy alone. Having a policy is a good start but when operating in Africa, there must be a protocol in place that will react when there is a road accident or medical emergency.”

Generally speaking, she said, the larger the firm, the more likely it is to have a good system in place but there is often more that could be done. Sometimes, for example, insureds will have a range of policies with different insurers and they need to be confident of knowing which policy would be triggered in different situations. Often there will be arguments between insurers of political risk and of property about an event.

“A couple of years ago when the Ivory Coast was holding elections, there was a lot of violence and looting. It was hard for insureds to access their sites and it has taken 18 months of hard work to settle the resulting claims. The different insurers needed evidence of what had happened but because the sites were inaccessible, it was extremely difficult for insureds to evidence their claims and almost impossible to prove whether their stock was lost in the initial wave of violence or from theft later on.”

Another example, Ms Malik said, relates to medical claims. “Malaria is endemic and many employees will suffer from it. A couple of years ago there was a wave of malaria resulting in many people falling ill. The problem for the insured was that people were attending different hospitals in different areas and, although they needed evacuation, it was extremely hard to know exactly where they were and what treatment they needed. Again, the right protocol in place would have helped enormously.”

Risk managers also need to be aware of when local companies are using their party services. “For example,” she said, “if an operation buses employees to work, have you checked that bus operator’s insurance. Your firm may well have a vicarious liability should an accident happen. Risk managers need to be alive to these third party risks.”

Generally, she said, “Private companies are more cognisant of the risks than the not-for-profit organisations that proliferate across the continent. The reality is that they understand that every loss has a direct effect on the bottom line. They will often bring global standards into play from the get-go.

“However, many smaller companies may understand some of the risks but simply not have the resources or knowledge to manage these risks. We find some clients simply do not know that insurance exists to cover these risks. Sometimes we have to guide them through the different insurances and explain how the cover works.”

However, she stressed, the trick is to remember, an insurance policy last, risk management first.

About Clements Worldwide:
Clements Worldwide is a leading insurance provider for expatriates and international organizations. Founded in 1947, Clements offers international car, property, term life, health, specialty and high risk insurance in over 170 countries. With offices in Washington, D.C., London, and Dubai, Clements delivers comprehensive coverage, superior customer service, and unparalleled claims response. To learn more and quote online, visit

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Esabel Khoury
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