[Interview] Teresa Long: WTW | Retail Bulletin

NEWSLETTER INSIGHTS

TRB sat down with Teresa Long from WTW. As an expert in risk and insurance, we wanted to understand how the retail industry’s approach to risk management has evolved in recent years, particularly in response to emerging challenges such as cybersecurity and supply chain disruptions.

Teresa started our discussion by saying retail organisations are shifting from a siloed, risk-by-risk model to a more strategic, enterprise-wide approach to risk management, recognising the interconnected nature of threats like cybersecurity and supply chain disruption. We’re seeing disciplines traditionally associated with more heavily regulated industries like financial services, such as advanced enterprise risk management – being adapted and applied to retail, often in a more agile and less administratively burdensome way.  Understanding the risk has enabled some to make effective decisions around their insurance and risk management needs. For cyber this means the balance between insurance and other mitigating options.

Q: WTW is known for its industry-specific expertise. How does WTW tailor risk and insurance solutions to meet the unique needs of the retail sector compared to other industries?

Our enterprise risk management approach begins with understanding what’s critically important to each client, recognising that these priorities will vary not just between the retail sector and other sectors, but also between individual retailers. By identifying key sources of value, defining risk appetite clearly and practically, and establishing meaningful metrics, we can design a tailored approach to align precisely with each retailer’s unique risk profile and strategic objectives.

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It all starts with understanding the specifics of the business activities and what key risk scenarios they are exposed to. Taking business interruption as an example, the exposure for a high street retailer is different to a supermarket selling perishable goods and different again to a predominantly on-line retailer. Being able to understand, in detail, the business activities, losses they are exposed to and quantifying the impact is critical to developing solutions which are relevant and add value.

In your view, what are some of the most common misconceptions retail businesses have about their insurance coverage, and how can they better align their policies with their actual risk profiles?

A common misconception is that having an insurance policy in place means all risk impacts are covered. Yet many critical exposures, such as customer sentiment or operational disruption, may be uninsurable. WTW’s role as a risk advisor is to help clients view insurance as one part of a broader risk strategy, combining tailored insurance programmes with non-insurance controls and response mechanisms to deliver holistic coverage that mitigates both the impacts and likelihood of risk events.

We’ve seen a trend of underestimating potential losses which has led to underinsurance. This really highlights the need to use analytics and model potential losses including things like cyber-BI reviews.

There is often a perception that Chief Information Security Officers (CISO’s) need to make a choice between Cyber Insurance and Cyber Risk Management rather than these being complementary. Cyber Insurance is increasingly being used as part of a company’s overall approach to managing risk, as is the case with other more traditional lines of insurance.

Looking ahead, what emerging risks do you believe retail companies should be preparing for, and how can industry specialisation help them develop effective strategies to mitigate these risks?

Two key areas of emerging risk are the proliferation of cheap, high-quality artificial intelligence and materially increased supply chain disruption. Amongst many other impacts, AI is transforming how consumers search, browse, receive recommendations, and make purchases online, and while adoption is almost non-negotiable to avoid falling behind, it introduces significant risks around privacy, reliability, and accuracy. Robotics and automation also present opportunities and challenges in operational efficiency and workforce dynamics. Meanwhile, geopolitical tensions and cross-border tariffs are making global sourcing more complex, expensive, and uncertain, requiring retailers to rethink how and where they procure goods and materials.

I think it’s critical to understand the ways in which the retailer is using AI so we are best positioned to understand where AI amplifies existing risks and where it creates new risks. From an insurance perspective, this will help us to answer the question of Who pays when AI fails? Now, the answer is, it depends!

To share a comment from one client in the sector, they felt the wide use of AI for them was business critical and not being an early adopter presented them with a bigger risk to the existence of their business than the potential unknown risks coming out of it. The impact of AI is inevitable and navigating these risks or capitalising on emerging opportunities is essential and organisations that fail to adapt risk being left behind.  Retailers should seek support from their risk and insurance advisor when it comes to exploring these risks – supporting you turn AI challenges into opportunities for growth and innovation.

To learn more about this issue, Teresa and her team will be at Ecom Connect on the 15th October and THE Retail Conference on the 6th November.