Intermediaries’ Roles on Managing Risks

1. Intermediaries’ Roles on Managing Risks V. International Istanbul Insurance Conference October 2013

2. Our Fact Sheet – How We Empower Results For Clients Aon Benfield’s industry leading expertise and data enables us to deliver unique value to our clients Capital Advisor • Utilizing a full range of expertise, proprietary tools and benchmarking capabilities, we provide the most appropriate strategy and form of capital to meet your needs. Client Advocate • We act as our clients’ trusted advocate in the global reinsurance marketplace and have a track record of structuring the most effective solutions across even the most complex of global risks. Custom-Tailored Solutions • Our award-winning tools and solutions give our clients the freedom to embrace new opportunities and confidence from having access to cutting-edge offerings.

3. What is Risk? Risk = Probable Frequency + Probable Magnitude ( of a future loss ) • Insurable RisksFireEarthquakeFlood... • Uninsurable RisksEconomical Slow-downRegulatory ChangesCompetition...

4. What to do with the uninsurable Risk? Maybe some help still available? • Help on market security before a risk attaches or even during the term of the policy if one or more of the risk carriers become insolvent or have weakening of their financial strength • Help on sanctions areasto give clearer picture to clientswho may have some businessor plans to have business over there • Advise on areas of political unrest or even terrorism to develop travel policies andemergency preparednessplans • Advise on cyber risks and minimise the effect on the balance sheet • Advise on contractual management, to minimise policy expenditure

5. How can Intermediaries improve Risk? • Risks can be simple..

6. How can Intermediaries improve Risk? • Or complex..

7. Whatever the complexity, when it comes to risk management A company needs to protect its; • Brand • Cash Flow • People • Assets • Balance Sheet • Processes

8. Methods & Systems / Risk Engineering & Asset Protection Deliver specificsupport to monitor and improve processes to assist in reducing loss costs. This can be done in-house, by the broker. • Property Risk ConsultingRisk control and asset protection to go beyond hazard and risk identification, and include keen awareness of innovative risk mitigation strategies, property and business interruption valuations, fire protection engineering and access to a best in class proprietary data management solution.When disaster strikes, such as earthquakes, explosions, hurricanes, fires or floods, the intermediary can help clients mitigate the loss and get back to business. • Fire Protection EngineeringTo provide clients across all industries with innovative and cost effective solutions that protect life and effectively reduce the risk of fire and security threats. • Casualty Risk ConsultingDefine and target key metrics for clients to understand the true cost of loss and accurately track progress toward improvement. Solutions include safety culture improvement, ergonomic consulting, fleet safety, regulatory compliance, safety training and product risk management.

9. Methods & Systems / Risk Engineering & Asset Protection

10. Methods & Systems / Business Impact Analysis To define Risk Profiles and to estimate the capability to recover after a crisis. Targets • Identification and evaluation of significant business interruption risks related to: • Key machines and functions. • Facilities, buildings. • Suppliers and vendors. • Internal dependencies. • Building up basis for developing risk management and continuity management. Enhance business interruption risk awareness and understanding.

11. Methods & Systems / Business Impact Analysis

12. Businees Interruption & Supply Chain disruptions Causes Impacts 2 3 1 Loss of productivity Increased cost of working Loss of revenue Customer complaints Service outcome impaired Stakeholder/shareholder concern Delayed cash flows Product release delay Damage to brand/reputation Increase in regulatory scrutiny Product recall/withdrawal Fine by regulator Share price fall Payment of service credits Adverse weather Unplanned outtage of IT Transport network disruption 6 7 4 5 Product quality incident Failure in service provision by supplier Earthquake/tsunami 8 9 10 11 Source: BCI survey 2011 Industrial disputes Cyber attack Civil unrest/conflict 2

13. Methods & Systems / Scorecards

14. Methods & Systems / Scorecards

15. Methods & Systems / Data Management & E-Solutions

16. Methods & Systems / Data Management & E-Solutions

17. Aon Risk Engineering Protect your Brand Aon focuses on risk-reduction, improving reputations and preserving brand name. • Consequence assessment, including modeling of fire, explosion and toxic release events • Frequency assessment using Fault Tree Analysis • Quantitative safety risk assessment to evaluate the impact on human health, the environment, property damage and business interruption • Comparative risk analysis to determine cost- effective solutions to risk reduction • Protect your Cash Flow • Aon saves clients money on insurance premiums by accurately representing their operations. • Reinsurance market underwriting consulting • Insurance risk engineering consulting • Estimated maximum loss (EML) • Risk rating • Business interruption studies • Construction project reviews • Protect your People • Aon helps companies reduce hazards and improve performance • Hazard identification and evaluation • Process Hazards Analysis (PHA) • Layer of Protection Analysis (LOPA) • Human Factors • Critical task analysis • Control room / alarm evaluations • Facility siting to examine the risk to building occupants • Audits to verify compliance and provide solutions • Provide solutions to underwriting recommendations Protect your Balance sheet Aon’s valuations help clients obtain appropriate insurance levels • Current property valuations • Desktop studies • Basic replacement cost reports • Detailed replacement cost reports • Protect your Assets • Aon provides engineering solutions to reduce risk, achieve compliance, and protect assets. • Fire hazard assessment • Code compliance • Suppression and detection system specification, design and performance testing • Fire water infrastructure specifications, design and performance testing • Fire water pump specification, design and performance testing . • Protect your Process • Aon provides engineering solutions in early stages of design, resulting in reduced capital expenditures and increased levels of protection. • Safety review of design features • Fire protection review • Spacing and layout review • High-level HAZID • Staffing for in-house project teams

18. Methods & Systems / A prerequisite: Questionnaire • Avoids patchwork information flow • Improves overall quality of the risk review by the insurance company/underwriter • Reduces the E & O risk

19. The cost effect • InsurabilityThe insurability of an asset highly depends on its risk conditions thus risk management is very important for insurability.As an example, the turbine technology is one of the most important criteria when insurers are accepting power risks.In Turkey, a number of premises belonging to ‘dangereous’ area of operation like furniture, paint and the like left uninsured recently. Some of them were able to get insurance cover afterwards with a plan for risk management practices. • Capex reductionOn the other hand the, the common practice is that an insured gets a cost reduction in paid premium in relation to the investment made on risk improvement.The risk improvement can directly affect the PML scenarios thus the limit ( or the capacity ) required to be protected.

23. QUESTIONS Ferhan Özay  |  Executive Director Aon Benfield Akkom Ofis Park No:2 Ümraniye 34768 İstanbul T: +90.216 444 12 66 ext.540 ferhan.ozay@aonbenfield.com |  www.aonbenfield.com Aon is the Principal Sponsor of Manchester United