“4Ć” Patent Pending (Product in development)

For eyes only of companies having signed a non-disclosure agreement with Willis

November 29 2012

CORPORATE CRISIS CONTINGENT CAPITAL: 4Ć

RIMS Fairfield / Westchester

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Align with Client Focus Environment

Shareholders

CEO & Board of Directors

Risk Managers

Brokers

Brokerage Firms

Insurance Carriers

Reinsurance

Capital Markets

Focus of Insurance Industry

Focus of Insurance Industry

Focus of ClientsFocus of Clients

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The top concerns of the C-Suite

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Source: 10K reports of Fortune 100 companies

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What Companies Need From Resilience

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Executive Expectations of Risk Management?

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Crises can arise from any source of which are very few insurable perils. In these situations, traditional risk financing is not ‘fit for purpose’

* Source: Willis team analysis; companies are members of S&P 500 and FTSE 100

• IBM 1992 and 1993 Technical obsolescence; management changes

• Amgen Inc 1993Market worries on biotech companies

• Starbucks 1999Uncontrolled costs rises in non-core business

• McDonald's 2000Failed strategy and senior executives changed

• Procter & Gamble 2000Failed strategy and CEO resigned

• Nike 2000Failure in distribution channels plus unfavourable currency translations

• Costco 2000Uncontrolled increasing in costs on adding offices and expenses

• Microsoft 2000 Estimated cuts in sales and profits combined with the influence of Dot-com bubble

• Adidas 2000 Allegation to the abuse of labour

• Intel 2000 Market demand decreased sharply in European market

• Disney 2001 Terrorism fears reduce revenues at theme parks

• Boeing 2001 Airline industry crisis due to the terrorist attacks

• France Telecom 2002 Heavy leverage caused liquidity problem; government bailout and CEO resigned

• Monsanto 2002Counter party default in emerging markets

• Vivendi 2002 Debt stress lead to liquidity problem; Chairman resigned

• Merck 2004 Withdrawal of Vioxx, largest drug recall to date

• Ford 2008Recall of “Ford Explorer” due to tire failure

• Toyota 2010Engineering issues trigger product recalls

• BP 2010Well blows out triggering huge liability commitments; CEO change

• And many more... 1,853 crisis events from our 600 companies sample*

On average, leading companies experience serious and sudden reversals of fortune once every 7 years

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4Ć offers the opportunity to pre-fund life-threatening risks

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Risks Retained Risks Pre-funded

Low threat and predictable risks should be retained to avoid value leakage from the Company

Pre-funding high severity risks protects corporates from life-threatening events

Ideal risk management should be… Retaining operational risks which have

little or no impact on company’s KPIs Pre-funding risks that may threaten

company’s survival

Current risk management practice Transfers risks at operational level to the

market (i.e. pre-funding) Company bears crisis events (post-

funding)