The 2017 Allianz Risk Barometer, which covers mainly large corporates, as well as a 2016 Zurich study on SMEs revealed that cyber risk is topmost on businesses’ minds. The same study showed that, in Asia Pacific, there are now twice as many SMEs that worry about cybercrime, fire, technological vulnerabilities, health and safety of customers or employees, and corruption compared to four years ago. Yet, in terms of preparedness for dealing with risk events, there is a marked disparity between 1/4  BIS central bankers' speeches  large corporates, and mid-sized and smaller companies. Predictably, larger companies are the ones that tend to have a structured risk mechanism in place, as well as the resources and expertise to deploy risk management tools. Larger companies also tend to have better access to specialist insurance products and the resources to establish a captive. Indeed, 90% of Fortune 1000 companies have a captive insurance company. Smaller and mid-sized companies are a different story. Most do not consider captives as a feasible risk management option. However, this is changing with innovations in captive models, such as group and rental captives and protected cell companies. It is not only possible for smaller companies to engage captives. A more compelling business case is emerging for the use of captives as small and mid-sized businesses evolve. Some of the most significant small business trends in the 21st century include disaggregated business networks, shorter cycles of proprietary knowledge, and rising entrepreneurship powered by a younger digital generation. Take for example, high-growth tech startups.

As disruptors, their business models and risk profiles, are often unique. Much of their competitive edge is derived from concepts and technologies that are new to the market. Ride-sharing platforms such as Uber and Grab are built on seamless apps that work exactly the same whether in London, New York or Kuala Lumpur. From an insurance perspective, however, trans-border solutions for such businesses are substantially more complicated. The ride-sharing model combines private vehicles with commercial use. The seamless insurance coverage for Uber drivers that integrates exposures from private and commercial use, and satisfy the mandatory requirements under different domestic laws, are not yet fully developed in all markets. This example calls for bespoke and efficient solutions which may not be readily available in certain traditional insurance markets. To put this in perspective, Google has projected that Southeast Asia’s web-generated business will multiply over 6 times to $ billion by 2025, from $ billion in 2015. The massive impact of technology on the world as we know it, will create new insurance gaps and demand for bespoke solutions. This will set the stage for captives to take on a more active role in the risk management ecosystem. Companies that are altering the business landscape will need creative and efficient risk transfer solutions that address their unique business needs. Used alongside other risk management strategies, including the traditional insurance market, captives allow companies to design an optimal risk transfer structure.