Emerging Environmental Risks, Marsh

Online, January 19, 2010 (Newswire.com) - Mumbai, January 19, 2010:

Environmental liabilities can be imposed on Directors and Officers of a company and in certain circumstances may even transfer to lenders and financial institutions involved in funding an organizations' activities advises Marsh, the world's leading insurance broker and risk advisor.

Industrial pollution has been a key cause of concern and the Indian Government and Regulators are following a robust regulatory framework to avoid any further damage. Existing laws and recent 'Green Bench' initiatives of the apex court in India and similar initiatives at the state level have set the trend of speedy action against those who damage the environment.

Speaking at the conference on 'Emerging Environmental Risks', Mr. Sanjay Kedia Country Head and CEO, Marsh India said "There is an increasing acknowledgement and expectation, from all - government, regulators, the general public and special interest groups, that business must take an active role in protecting the environment from damage and deleterious change".

"Companies will now need to provide for potential environmental risks and associated liabilities, through a process of risk quantification to ensure that any environmental damage can be effectively rectified and that the liabilities do not have a direct effect on the balance sheet." he added.

Some of the types of environmental risks faced by companies are third party property damage, bodily injury to general public, clean up costs incurred for remediation of the damaged ecology and damage to biodiversity.

Marsh brought to light specific industries such as chemical, pharmaceutical, auto, infrastructure and hospitality which are at high risk. While Environmental Impact Assessment clearances for green field and expansion projects and NOCs for operating commissioned plants enable industrial activity, risk exposures from carrying out such activities need to be insured. Pollution Legal Liability and Contractors Pollution Legal Liability are the covers available to mitigate risks.

Marsh's global experts highlighted the international regulations and the impact on Indian businesses. As more and more Indian companies look for acquisitions and set up international presence, they will not only have to comply with regulations locally but also internationally, and sometimes in very developed, litigious and highly regulated jurisdictions. In a number of countries financial security provisions are obligatory for certain types of businesses and companies are increasingly looking towards insurance to provide the financial security required.

As the regulatory and legislative action on the 'Green' initiatives catch up, it is imperative that India Inc. is prepared to manage these risks well. Companies need to be aware of these risk exposures not only to protect the environment but also protect their balance sheets from long tail environmental liability cases.