Businesses need to adjust to a world where accelerating geopolitical shifts are becoming the new norm. Remaining agile and adaptive in a polarised world will be a precondition for success going forwards.

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Ensuring business resilience in a polarised world

For further information, please contact a member of the team or visit our Cargo and Logistics page.

After several years of post-pandemic recovery and trading uncertainties, the beginning of 2025 has seen an increase in market participants that has led to insurance capacity reaching an all-time high. This comes despite ongoing challenges in the broader economic and geopolitical landscape.  

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New business appetite for cargo risks at record levels

US President Donald Trump has recently issued several executive orders governing federal policy that are diverging from regulations in other jurisdictions in the Western world. This is creating a more challenging environment for multinational companies to navigate, raising the risk of companies failing to comply and thereby increasing the likelihood of directors' and officers' liability (D&O) related claims. The US government’s initiatives focus on corporate policies related to diversity, equity, and inclusion (DEI), but anti-bribery and environmental, social and governance (ESG) policies may also be impacted.

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Multinational companies: navigating diverging regulatory environments

Carbon credit trading has emerged as a crucial strategy available to businesses seeking responsibility for their carbon footprint. Investing in projects and schemes that reduce or avoid emissions enables organizations to play a vital role in decarbonizing the economy. Despite the significant role that carbon credits play, some organizations remain hesitant about using them. Much of this reluctance stems from persistent myths that obscure the true value and mechanics of carbon credits.  Gathered from recent conversations with market participants, the topics highlighted below clarify some of these misconceptions and help provide insight into the evolving role of insurance in this market. 1. “Carbon credits are a form of ‘greenwashing’” Some people worry that buying carbon credits is just a way for businesses to “buy their way out” of cutting emissions. It is true that relying solely on offsets, while ignoring the need to reduce their own emissions, could be short-sighted. As climate policies tighten, the cost of carbon credits will likely rise, making them an expensive and unwise alternative to cutting emissions at the source. Responsible businesses strike a balance by reducing their own emissions where they can and using offsets for the remainder they cannot yet avoid. When used properly, voluntary carbon credits are part of a broader, science-based approach to tackling climate change — not just a superficial fix. 2. “Carbon credits are only generated by planting trees” While forestry projects, such as afforestation, reforestation, and avoided deforestation, are common and highly visible, carbon credits can come from a wide variety of activities. Examples include: Direct Air Capture (DAC) 
Technologies that remove CO₂ directly from ambient air. Enhanced Rock Weathering 
Accelerating a natural chemical process that removes CO₂ from the atmosphere. Soil and Land Remediation 
Improving soil health and sequestering more carbon in agricultural lands. Agricultural Methodology Innovations 
Employing no-till farming and other practices that reduce emissions or capture more carbon. The diverse range of solutions provides flexible pathways for companies seeking to offset hard-to-abate emissions. 3. “Past results of carbon credit projects indicate future performance” Every decarbonization project is different and it is challenging to correctly forecast the amount of future carbon credits it will produce. Interfering factors could range from natural catastrophes, jurisdictional regulatory changes, developer negligence and fraud, or science-based methodology rollbacks.  Such issues can undermine the credibility and function of projects. This can result in fewer carbon credits being delivered than originally anticipated — posing financial and reputational risks to stakeholders.  4. “All carbon credits are the same” Carbon credits are primarily segregated into two key forms: compliance carbon credits (CCC) and voluntary carbon credits (VCC). Each credit represents a reduction or removal of one metric ton of CO₂, or its equivalent, from the atmosphere.  CCCs are traded in government and regulator-led markets, with regulated pricing. CCC and compliance markets can differ depending on jurisdiction, but are generally driven by mandatory schemes. VCCs emerged as an opportunity to support mandatory decarbonization efforts. VCCs are subject to varying degrees of verification oversight and customer protection. Entities acquiring VCCs can transparently demonstrate a commitment to sustainability, enhance their reputation, attract environmentally conscious consumers, lenders, and investors, while aligning with global efforts to combat climate change. 5. “Carbon credits don’t need insurance” Insurance can play a vital role in transferring risks associated with VCCs. Coverage can provide invaluable protection for businesses against the unique risks inherent in carbon offset projects, which include: Non-delivery of carbon credits 
Carbon credits can be transferred late, or not at all, to a buyer. Non-delivery could occur if a developer defaults, or a project is damaged or interrupted before it can generate a specified number of credits. Carbon credit reversal 
Greenhouse gases sequestered by a carbon project can be at risk of being released back into the atmosphere — negating its offset effect. Reversal could occur as a result of extreme weather, natural catastrophe events, or human activities such as logging or poor land management. Carbon credit invalidation 
There is a possibility of issued credits being subsequently invalidated by a government, accreditor, or verification body. Beyond fraud or credit reversal, invalidation could also occur from methodology or accounting errors. By transferring these exposures to an insurer, businesses can protect their financial and reputational interests, while reinforcing confidence in carbon credit transactions.  6. “Carbon credits do not actually reduce emissions” Properly verified carbon credits represent tangible, quantifiable emission reductions or removals. Credible verification standards, such as the Gold Standard or VCS amongst others, ensure that projects meet strict requirements for additionality, permanence, and transparency. Still, not all credits are created equal. The quality of carbon credits depends on the rigor of the methodology used, the verification process, and ongoing monitoring. It is crucial to ascertain if projects are adhering to standards and certification schemes that verify and validate the quality of the expected offsets.  7. “Carbon credits are only relevant to large, multinational organizations” Carbon credits are relevant to companies of every size — from startups to global corporations — as every organization has a carbon footprint. In fact, small and medium-sized enterprises collectively account for a significant share of global emissions. For all organizations, carbon credits can be a valuable addition to their ESG programs.  By purchasing voluntary carbon credits to complement their direct emissions-reduction efforts, companies of all sizes can play an active role in tackling climate change and contributing to a net-zero future.

Carbon credit trading has emerged as a crucial strategy available to businesses seeking responsibility for their carbon footprint. Investing in projects and schemes that reduce or avoid emissions enables organizations to play a vital role in decarbonizing the economy.

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Carbon credits: 7 common misconceptions

Organizations across the globe are facing an increased exposure to sexual misconduct liability (SML) claims due to growing awareness and reporting following the #MeToo Movement. Claims against your organization can result in substantial costs, severe operational disruption, and potentially devastating reputational damage.  It is critical business leaders address this threat and implement appropriate risk mitigation measures, as well as establishing robust defense in case of liability claims.  A developing area of litigation Sexual abuse is alarmingly recurrent worldwide. In the US, a 2024 survey by the Newcomb Institute, found that roughly 1 in 4 adults (26%) experienced sexual harassment or assault in the preceding 12 months. While in Australia, the number of sexual assaults registered by police rose by 11% in 2023 — the 12th straight annual rise — to reach the highest rate of recorded sexual assaults in 31 years.  Acts of sexual misconduct pose a high-risk safety concern within workplaces — especially where the care of minors and vulnerable adults is paramount. As the occurrence of sexual misconduct grows, litigation and claims surrounding SML have also increased in recent years due to heightened societal awareness, evolving statutory requirements, and growing scrutiny. Additionally, in the US, the average amount of sexual abuse settlements is also “increasing dramatically”.  Organizations must remain cognizant of changes within relevant law and legislation. For example, depending on jurisdiction, statute of limitations laws may change and enable potential, historical claims of abuse to be lodged.  Some US states have introduced legislation that either extends or waives the statute of limitations for childhood sexual abuse victims. This has allowed victims to sue abusers, years after the alleged wrongful act. The risk of sexual misconduct to businesses SML is not a novel risk to organizations. However, many companies — of all sizes — may have limited experience in preventing, handling, and responding to such allegations.  Organizations that could be at greater threat of SML claims, include: Educational institutions Religious authorities Transportation companies  Healthcare providers Leisure facility management companies Sexual misconduct allegations — whether unsubstantiated or not — can decimate an organization’s reputation. Members of the public and media could interpret a sub-standard response as either victim-blaming, ignorant, or uncompassionate.  Beyond reputational risks, sexual misconduct allegations can have a deleterious effect on wider company aspects. While the USA Gymnastics sexual abuse scandal “eroded trust” between the organization and its thousands of members, sponsorship also dissipated, and threats were made for decertification.  Settlements for SML claims can reach vast sums of money. In Australia, a Tasmanian church was ordered to pay AUS$2.4 million to a victim of sexual abuse, and in the US, two school districts paid settlements totaling $4.8 million to students abused by their water polo coach. Ostensibly, these totals have the potential to render companies insolvent.  Furthermore, perpetrators of sexual misconduct and abuse are frequently repeat offenders — introducing the possibility of class action lawsuits, where allowed.  Creating the correct response Organizations should investigate allegations promptly, confidentially, and with a high duty of care. Establishing proactive risk management and sound prevention tactics can help organizations lessen the risk of sexual misconduct, and potential SML claims.  Employers must introduce measures that reduce the chances of sexual misconduct occurring. It is inadequate to only conduct training and checks at the time of hire. Staff should be subjected to thorough, repeated screening procedures, ongoing training requirements, and supervision policies to lessen the chance of SML incidents. It is critical that company policies and procedures are reviewed and enhanced throughout the year — to help mitigate evolving risk exposures. This is an area that authorities are keen to enforce. As part of a recent settlement, American ride-hailing services company Lyft was ordered to establish “safety and governance reforms” that do more to protect passengers, and limit sexual and physical assaults from drivers.  Both employees and the public should be fully aware of the correct channels to report actual or suspected incidents of abuse or misconduct. This should be clearly signposted and easily accessible.  The initial response following an accusation or incident is of the upmost importance. Appropriate action and interaction with all relevant parties can have significant effects on future outcomes, such as potential claim settlements and organizations’ reputations. Response procedures should be well-documented, regularly rehearsed, and fully understood by all relevant stakeholders.  Insurance: the last line of defense Typically, SML claims are covered under General Liability or Hospitals Professional Liability policies. However, exclusions for SML exposures, and further policy restrictions related to sexual misconduct, are becoming more common. This is, in part, due to insurers’ reluctance to underwrite SML risks on either an occurrence or claims made basis, as claims could result in ‘nuclear verdicts’ — especially in conjunction with statutes of limitations opening up. Consequently, some insurers within the US have reduced, removed, or specifically excluded coverage for SML. SML exclusions or “silent” coverage can create gaps or leave organizations without coverage at all. Affirmative, standalone SML policies can remedy this. Coverage can be secured from the London and Bermudian markets, and provide organizations with suitable balance sheet protection and risk management support.  Key features of standalone SML policies, can include: Funding for defense costs  Protection against retroactive cases (subject to market appetite and risk exposure management for individual insureds) Risk management and crisis response services SML policies can be modified to provide tailored coverage for each organization. This enables underwriters to introduce bespoke solutions, such as:  Availability of limits on both a primary and excess basis Creation of Master Policies, Lineslips, and Binding Authorities Options that can help facilitate efficient underwriting processes for organizations who either have a significant number of locations which purchase individual insurance policies, or to risk portfolios who are looking to create a collective solution. Captive reinsurance  Acting with Lockton It is crucial that business leaders take action to build resilience within their organizations. Beyond bespoke SML coverage to suit your organization, you can find out more on how to protect your business here, or by contacting a Lockton London Casualty team member. 

Organizations across the globe are facing an increased exposure to sexual misconduct liability (SML) claims. This is due to increased awareness and reporting following the #MeToo Movement.

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Addressing risks associated with sexual misconduct liability

The retail industry is facing several emerging risks that can have a severe impact on revenues. These include changing weather patterns, supply chain disruptions, and the consequences of the digitisation of business processes.  Where existing risk mitigation measures are insufficient or traditional insurance policies are unable to cover the risk, parametric insurance solutions can plug the gaps.    The role of parametric insurance  To ensure retailers remain relevant and effective in a rapidly evolving environment they must prepare for potential future disruptions and develop and regularly review risk mitigation strategies. However, no risk management strategy can eliminate all risks, and it is, therefore, worth exploring alternative risk transfer options, particularly for emerging risks.   

Parametric insurance pays out according to predefined triggers based on independent data and offers an efficient and flexible tool to plug gaps in the traditional insurance portfolio. It can, for example, protect against third party supplier risk, supplement sub-limited exposures and protect against non-damage business interruption events when linked to a natural disaster. This could be for example a lack of precipitation or too much of it.   

A business must suffer a loss from the pre-defined trigger event for a parametric insurance to pay out. But, unlike traditional insurance, there is no need for loss adjusters to determine the loss and there are no exclusions for any assets or business interruption losses.   

For some risks such as flood the trigger might be obvious, but for other risks selecting an appropriate trigger can be more complex. The key is that the data source for the reporting agency is independent of both the client and the insurer to ensure complete transparency in the contract. There are various data sources available to measure and trigger policies. Lockton works with several data providers to structure and price a solution that suits the individual needs of each client.   

Advantages of parametric solutions:   Business interruption doesn’t require a physical damage trigger   There are no deductibles   Contracts are transparent and simple   Claims are usually recovered within 30 days as there are no lengthy loss adjuster requirements   Parametric solutions are by their very nature bespoke and uniquely tailored to the risks of each individual business. Set out below are some examples of circumstances where parametric solutions can be deployed.   Supply chain risks   The global supply chain is a vital component of the retail industry. Weather events such as typhoons, floods, and droughts can severely disrupt manufacturing processes and transportation networks. Factories may face shutdowns, and transportation routes can become impassable, leading to significant delays in the delivery of goods.   Tracking devices on vessels, for example, provide real-time data, and can serve as a trigger for payout when delays reach a certain threshold, allowing retailers to stabilise revenue during unexpected events whilst supplying a buffer for those reliant on the global supply chain. A wide range of events can cause delays in the supply chain and extend shipping lead times, including labour strikes or congestion at the ports, increasing costs for retailers, who may need to seek alternative suppliers or expedite shipping through more expensive means.   Retailers dependent on just-in-time inventory processes are particularly vulnerable, as any disruption can lead to stockouts and lost sales. Increasing global instability and the impact of climate change will inevitably impact retailers’ risk exposure and require long-term strategies to enhance and increase the resilience of supply chains.  Weather impact on revenues    Weather patterns have become less predictable and risk mitigation measures such as flexible inventory management and data analytics can only limit losses. A surprisingly mild winter can severely impact sales of coats, boots and winter accessories, and the excess inventory and reduced revenues force retailers to offer deep discounts to clear stock. Similarly, retailers specialising in garden products and furniture may experience a decline in sales in a wet and cold spring.   Technological advancements have created new data points that can serve as triggers for parametric insurance solutions. For example, retail sales data can be analysed to track irregular sales patterns and how well inventory is performing during abnormally mild winters. By looking at historical weather patterns and purchasing trends, we can use data to predict future inventory demand. Parametric solutions can structure an index with this data to create a policy that triggers when there are irregularities in weather which affects the sale of winter inventory. This can help to mitigate excess stock, reduced revenue, and the need to sell of stock at lower-than-desired costs.   Flood   Parametric solutions can protect properties in flood exposed locations. Cover will be based on a selected indemnity value which is paid once water breaches an agreed trigger depth limit. The water depth is monitored by a mobile-connected sensor installed at the insured location and once the trigger depth is breached the claim gets paid. Cover is flexible and can be arranged to pay out different indemnity amounts at varying depths: businesses can choose a lower depth/lower indemnity limit to cater for a flood that may just result in clean-up costs and select a higher indemnity/depth for more catastrophic flood events, for example.   Communicable disease   As a result of the pandemic, communicable disease is now a firm exclusion under all policies within the traditional insurance market. However, the parametric market continues to provide an option to write back this coverage. Retailers can purchase protection with triggers such as government-mandated lockdowns, restrictions on movement, or decisions from industry standard organisations such as the World Health Organisation.   For further information, please visit the Lockton Retail Practice Group page or contact your Lockton representative. 

The retail industry is facing several emerging risks that can have a severe impact on revenues. These include changing weather patterns, supply chain disruptions, and the consequences of the digitisation of business processes.  
 
Where existing risk mitigation measures are insufficient or traditional insurance policies are unable to cover the risk, parametric insurance solutions can cover the gaps.  

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Protecting your retail business with parametric solutions 

As the avian influenza virus (bird flu) continues spreading around the globe, poultry farmers need to stay alert and remain vigilant with mitigation measures. In addition to monitoring local and regional incidence rates and closely following risk mitigation standards, poultry farmers should consider making use of insurance protection while it remains available.   Rising incidence of bird flu  The highly contagious nature of bird flu and the potential economic losses it can cause for poultry farmers makes it a critical area for risk management and preparedness.  Bird flu viruses are either high or low pathogenic viruses (HPAI and LPAI, respectively). Poultry infected with LPAI viruses may show mild signs of the disease or none at all. Infections caused by HPAI can cause severe disease and even death. Both HPAI and LPAI can spread quickly through flocks. Moreover, certain LPAI viruses can mutate into highly pathogenic strains, which is why it is important that outbreaks are managed promptly.   Infected birds can shed bird flu in their saliva, nasal secretions, and faeces. Susceptible birds become infected when they have contact with the virus as it is shed by infected birds. They also can become infected through contact with surfaces that are contaminated with the virus. Wild birds are natural hosts and reservoirs for all types of bird flu, so play a major role in the evolution, maintenance and spread of these viruses.  The last quarter of 2024 saw an increase in cases of bird flu in wild and domestic birds compared to the previous quarter in Europe, according to the European Food Safety Authority (EFSA). Most of the detections in both wild and domestic birds were found in South-Central Europe, mainly in areas with a high concentration of poultry farms. This suggests that the large number of farms in these areas and the type of poultry production contributed to disease spread between farms.   Meanwhile, authorities in the US have reported a significant surge in cases among cattle, with more than 800 establishments affected in 16 states. The virus was also recently found in batches of raw milk sold in retail shops in California. Additionally, a different virus strain was detected in pigs for the first time in Oregon, in a mixed livestock-poultry farm. This is of concern, given the potential for pigs to be co-infected by different types of influenza viruses that could adapt and spread to other species.   Key risk factors for bird flu  Among the factors that can heighten the risk of bird flu outbreaks are:  Proximity to wild bird habitats – farms near wetland areas or migratory bird pathways are at higher risk  Biosecurity lapses – inadequate farm hygiene and failure to enforce biosecurity protocols increase the likelihood of disease spread  Climate change – altered migratory patterns due to climate change may increase the risk of new strains being introduced to farms.  Supply chain disruptions – delays in culling, testing, and restocking lead to longer recovery times for affected farms  The direct impact of an outbreak is substantial. Farmers face the immediate cost of culling infected flocks, lost revenue from egg and meat production, and potential trade restrictions. Indirectly, outbreaks of bird flu can lead to long-term reputational impacts on local, regional, or national food exports, and heightened regulatory scrutiny. Exposed parties may see increased insurance premiums, since insurers that underwrite business interruption and livestock mortality policies experience significant claims exposure during an outbreak. Regulators often impose movement restrictions during outbreaks, causing operational bottlenecks that affect supply chains.  Mitigating the bird flu risk  Managing the risk of avian flu requires a proactive, multi-layered approach that combines prevention, preparedness, and response. Key strategies include:  Enhanced biosecurity measures – disinfection points for vehicles, restricted access to poultry sheds, and personal protective equipment for workers  Wildlife management – reducing farm exposure to wild birds through the use of nets, covered feed areas, and other deterrent measures  Monitoring and surveillance – early detection is crucial, and farms should implement regular testing and collaborate with local, regional, and national government to receive timely alerts about outbreaks  Insurance and financial protection – comprehensive insurance coverage, including business interruption and livestock mortality, provides a financial buffer against the impact of an outbreak  Contingency planning – farms should develop outbreak response plans, including protocols for rapid culling, disposal of infected stock, and resumption of operations.  Biosecurity checklists for poultry and captive bird keepers are available from both the UK Animal and Plant Health Agency and United States Animal and Plant Health Inspection Service. To understand the risk exposure of a farm, potential entry points for the virus, and develop a strategy to prevent an outbreak, farmers should first make a risk assessment of the premises, ideally taking advice from a risk professional or an insurer. Tackling the growing risk of bird flu for farms will require a collaborative approach involving farmers, insurers, policymakers, and the wider agricultural sector.  Enhance resilience with insurance solutions  In the event of a bird flu outbreak, the government authority responsible for agriculture will, almost certainly, order the slaughter of all birds at an infected farm, and possibly farms in close proximity, in order to mitigate the risk of spread of the virus. Compensation is likely to be available for the direct cost of the birds affected, and potentially to cover the associated clean-up costs. However, this compensation will not cover any ensuing business interruption losses while business returns to full operations.  A Commercial Livestock Avian Influenza Insurance policy is intended to provide a degree of indemnity for this loss of revenue. Insurance solutions can provide cover for the cost of livestock losses, clean-up, and business interruption. In addition, insurers may be able to assist with emergency response, culling protocols, and claims processing in case of an event. By aligning insurance coverage with risk reduction measures, farms may also be able to reduce premium costs while enhancing resilience.  Farmers looking to secure insurance protection against a bird flu outbreak should note the following:  Bird flu cover is limited and not readily available in all regions given severity of potential losses.  Cover is often sub-limited to provide a proportion of the full limit (a means for insurers to limit their exposure, given the large potential losses associated with bird flu).  Insurers will request information before providing cover, such as the number of birds in each location and the number of farms in the vicinity. Underwriters will combine this with broader outbreak data to calculate the risk of cross infection. Underwriters will also want to see evidence of adherence to bio security protocols.  Insurers look more favourably on known clients and policyholders (i.e. those with whom they have an existing relationship). We therefore suggest that policyholders take out a livestock insurance policy that covers the livestock in the event of death by an insured peril.  Once a bird flu outbreak has occurred, it is far more difficult to obtain cover. As a preventative measure, we advise taking out bird flu cover before an outbreak occurs.  If bird flu is already present in your region, holding an existing livestock insurance policy will put you in a better position to obtain a bird flu insurance top-up.  Many governments require suspected cases of bird flu to be reported to a relevant authority. Online resources are to monitor outbreaks of bird flu, which may help to assess the current risks to a farm or flock:   In the US, via the Centers for Disease Control and Prevention.   In the UK, via the Animal and Plant Health Agency.  In the EU, via the EURL Avian Flu Data Portal.  For further information and help securing cover, please contact a member of our Livestock team. 

As the avian influenza virus (bird flu) continues spreading around the globe, poultry farmers need to stay alert and remain vigilant with  mitigation measures. In addition to monitoring local and regional incidence rates and closely following risk mitigation standards, poultry farmers should consider making use of insurance protection while it remains available. 

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Bird flu: mitigating the risk of disease outbreak and spread

While global sentiment may be subdued in some sectors, there is a lot of excitement about data centers. Demand for data center capacity is expected to grow rapidly in coming years, driven not only by customer demand but also by the rapid rise of artificial intelligence (AI) advancements. To meet this demand, AI data center capacity is conservatively projected to experience a compound annual growth rate (CAGR) of 40.5% through 2027, according to estimates from the International Data Corporation.  Data centers need to meet and exceed exacting standards from often demanding customers, both during construction and the data center's operational life. Whilst there is much positive pressure on developers to deliver these increasingly large and complex construction projects quickly; quality and reliability are cornerstones of every customer requirement.  Owners may face significant financial consequences should they not meet the ‘Ready For Service’ date or the standards they have agreed with their customers. Risk management, which includes engaging with the global insurance market, must therefore be a key consideration. The global insurance market has rightly identified technology and digital infrastructure as an area of focus for both capacity and IP deployment.  Engaging with insurers effectively will create opportunities to secure good terms for transferring risk from investors' and owners' balance sheets to insurers.

We have specialized expertise and extensive experience in these industry sectors and can provide comprehensive advice and negotiate innovative solutions with insurers to suit your specific needs.

In this document our specialists discuss data center risk considerations for every stage of a project, from planning and construction through to a potential sale, including recommendations for mitigating these risks. Click here to learn more.

While global sentiment may be subdued in some sectors, there is a lot of excitement about data centers. Demand for data center capacity is expected to grow rapidly in coming years, driven not only by customer demand but also by the rapid rise of artificial intelligence (AI) advancements. To meet this demand, AI data center capacity is conservatively projected to experience a compound annual growth rate (CAGR) of 40.5% through 2027, according to estimates from the International Data Corporation.



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Data centers: Protecting projects across the life cycle

Fixed fire protection systems (FFP) such as sprinklers are one of the most effective ways to prevent a major fire loss to a property or business enterprise. Commonly recommended by property insurers, systems can detect a fire in its initial stages and deliver a fire-fighting agent where it is needed, reducing the risk to people, property and the environment.  To ensure the maximum benefit from the investment in fire protection, it is important systems are designed and installed to meet insurer and other stakeholder needs. This Inside Risk edition explores the main considerations when selecting fire protection systems. Why consider fire protection systems? FFP can be specified and installed for a variety of reasons including life safety, property protection and to improve business resilience in the event of a fire. Compliance with life safety regulations does not automatically ensure an enterprise’s resilience to fire or other perils. Insurers and businesses can look beyond regulatory compliance to encourage a fire strategy which also protects the property. Businesses can benefit from a well-designed fire strategy through smaller property damage loss estimates (in normal conditions) and / or improved fire risk quality ratings during insurance assessments - these can positively impact factors such as premium, capacity or underwriter appetite.  Where should fire protection systems be installed? Broadly speaking, FFP should be considered wherever combustible construction or combustible occupancy is present. However, there are a wide range of additional considerations: Potential fire hazards  Building construction features  Potential loss to property and business from a large fire The criticality of business operations and any business continuity options available Environmental considerations Practicability of installation (retrofitting systems into an existing building can introduce additional costs, compared to a new build) FFP can be installed in a range of applications to provide: Building protection (such as providing sprinklers throughout a facility) Compartment protection (such as installing specific protection in an IT or utility room) Local protection (such as installing protection to a specific item of equipment such as a printing machine) Building protection provides the most extensive coverage, reducing ‘normal’ loss estimates. Compartment or local protection can also be considered to provide an additional level of protection to specific hazards (such as in-cabinet protection to critical electrical panels) or where building protection is not practicable or technically feasible.  It is important to note that FFP technologies do not necessarily extinguish the fire. Some systems are designed to control or suppress a fire, limiting its size and providing time for the responding fire brigade to arrive and conduct final extinguishment. As such, a robust approach to provide manual fire water and access to extinguish the fire is also required as part of the fire strategy.  What type of fire protection should be installed? There are many different FFP technologies available, each with their own applications, advantages, and limitations. Some common systems include: Sprinkler systems Well-established water-based technology recognised to provide robust property protection by controlling or suppressing a fire. To do so it uses sealed sprinkler heads which operate based on heat released locally from a fire.  Some sprinkler systems such as residential sprinklers are installed for life safety purposes and may not be considered sufficient for property protection purposes. Deluge systems Water-based technology using open delivery nozzles to discharge water (or foam) to a specific area simultaneously. It’s typically used in high-hazard environments such as chemical plants, storage tanks or transformers.  Water mist Water-based technology providing finely divided droplets of water to suppress or extinguish a fire. Such systems may be designed for local, compartment and potentially building protection but generally need to be based on full scale fire testing to demonstrate performance. Foam Foam systems provide a foam blanket to seal off vapour generation and cool the fuel. They are used for specific hazards such as where ignitable liquid is stored, processed, or transported. There are wide ranges of different application methods which can deliver very low, low, medium and high expansion foam depending on the situation.  Foams containing fluorine products are currently being phased out for environmental reasons and existing foam equipment may require replacement or upgrading for use with non-fluorine-based foams. Gaseous fire suppression Gaseous systems could be either inert gases (which reduce the concentration of oxygen through dilution and displacement) or chemical gaseous systems which remove the heat from the fire though chemical reaction. Such systems are typically used for compartment protection.  Carbon dioxide is another gaseous fire suppression option, functioning in a similar way to inert gases. It can be quickly lethal to humans, requiring strict controls for health and safety risks.  Kitchen systems Designed specifically for kitchens, these systems deliver wet-chemical agents to cooking equipment such as deep fat fryers, cooking ranges, grills, and extraction hoods. The agent reacts with the burning oils and greases to form a soapy layer to extinguish the fire. Systems can be interlocked to isolate fuel supply on activation. Oxygen reduction systems (ORS) ORS are a technology which reduces the oxygen concentration within a specific area to reduce the likelihood of ignition and fire. They are not considered a fire suppression or extinguishing system but use an ‘inerting’ approach to help prevent ignition. The selection of the oxygen concentration is an important consideration to ensure the effectiveness of the system. Selecting a fire protection solution When considering FFP options, engage early with your broker and insurer for property risk control advice and use fire protection companies who provide a wide range of FFP solutions to help identify the most appropriate system for the specific application.  During the process also consider: Recognised standards: Select an appropriate property protection standard or guideline in collaboration with your broker/insurer for the design and installation. Common examples include NFPA codes, FM data sheets and LPC Sprinkler Rules.  Independent third-party certification: Seek suppliers, products or systems which have a third-party certification recognised by property insurers to demonstrate suitable standards have been applied.  Approvals: Seek the use of approved equipment such as UL, FM, VdS or LPCB. Plan review: Engage with your broker, insurer, or risk engineering provider for plan review of proposed installations. Environmental sustainability: When assessing FFP options, consider the environmental features of the proposed technology and the ongoing supply of replacement parts and extinguishing media.  Considerations following installation and commissioning: Systems should be implemented following commissioning to ensure FFP remains available, reliable and adequate throughout its working life. A fire protection impairment programme can help sites to identify, manage and notify situations where fire protection is not in service. Inspection, testing and maintenance programmes (such as in accordance with NFPA 25) help ensure systems remain reliable and operate when needed. Management of change processes can help ensure fire protection systems remain adequate, ensuring any planned changes do not compromise installed fire protection.  Fixed fire protection systems are an effective way to reduce the risk of a large fire, the impact of a fire on the environment and to improve property risk quality. A suitable technology should be selected, designed, installed, and maintained to ensure the system remains available, reliable and adequate to deliver when it is needed.  A series of Active Fire Protection Guides have been prepared by RISCAuthority providing information on the main types of fire protection technologies available.  For further information, please contact a member of our team or visit the Lockton Risk Control page.

Fixed fire protection systems (FFP) such as sprinklers are one of the most effective ways to prevent a major fire loss to a property or business enterprise. Commonly recommended by property insurers, systems can detect a fire in its initial stages and deliver a fire-fighting agent where it is needed, reducing the risk to people, property and the environment.  
To ensure the maximum benefit from the investment in fire protection, it is important systems are designed and installed to meet insurer and other stakeholder needs. This Inside Risk edition explores the main considerations when selecting fire protection systems.


Engineer checking Industrial fire control system,Fire Alarm controller, Fire notifier, Anti fire.System ready In the event of a fire.

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Inside Risk: selecting fire protection systems

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