Paying Back the Viking

What Are Risk Scenarios?

Each Risk Scenario consists of two parts — The Scenario and The Analysis.

Part 1: The Scenario (15 minutes) Read The Scenario and answer integrated poll questions that solicit your approach to the situation. The Scenario is based on hypothetical situations that showcase emerging risks.

Part 2: The Analysis Benchmark your responses against other participants, access relevant Risk & Insurance articles, review curated resources from the web and learn about existing products.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

The government’s floating, storm tracking robots, riding on the ocean swells off of the North Carolina coast, felt Kenneth before anyone else did.

To them, at first, Kenneth felt just like a shoulder shrug of the ocean. But the storm, a brawny Category Four when it struck land, would carry a rougher touch for the business owners there.

The ship-building industries along the coast got it bad. Johnson Industries, a third-generation naval parts manufacturing business, saw most of its manufacturing floor washed away.

The morning after the storm struck, Heady Johnson, the president of Johnson Industries, and Wiley Ferris, his controller, took a tour of what remained of the factory.

The view was dismal. Three feet of salt water covered the factory floor and there appeared to be substantial damage to the walls and roof of the facility.

“What do you think?” Heady asked Wiley, after a long, grim period of time the two spent looking down on the factory floor from Heady’s office.

Heady could tell Wiley’s brain was working extra hard, so he gave him all the time he needed to answer.

Before he answered, Heady looked out the window, toward the outer wall of Viking Spirit, his Norwegian-owned competitor. At first glance, Viking looked like it had got it just as bad if not worse.

Wiley followed his gaze over at Viking. Then he spoke in his slow, careful poker player’s drawl.

“We have property, business interruption and contingent business interruption coverage in place,” Wiley said.

“I can’t see why they wouldn’t be enforceable,” he said.

Then Heady jerked his thumb over towards Viking.

“But so does our competitor over there, I bet.”

Wiley considered. “And then some,” he said. “And then some probably,” referring to Viking’s German-backed limits.

“What are your plans to….?” Wiley started to say but then Heady jumped in with his idea.

“If we move really quickly we might have a chance here,” Heady said and he looked at Wiley to make sure he had his full attention. He had his attention.

“We will be back up and running before Viking over there. I am going to lose out on some contracts, but so are they. The question is who loses out on more.” Heady said.

Heady continued, “I want the adjuster in here first thing in the morning.  If we can agree on what needs to be repaired, we’ll get it done, and we can restart production before Viking has their drawings finished.”

“Hurricane Kenneth was a big event,” Wiley warned. “We’re really gonna’ have to work hard to get the insurers’ attention.”

“That’s why you’re here,” said Heady as Wiley went to call the adjuster.

“Oh, hey Wiley!” Heady called out. “And I want all my lost sales paid while I crank the repairs into high gear.”

“We might have to give a little to get a little,” Wiley said with a grin.

“It will be worth it,” Heady to said to no one in particular.

Do you know now on which areas of your insurance coverage you might want to be flexible for competitive reasons in the case of a catastrophic weather event?

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