This article provides a concise overview of the critical areas finance leaders should review to ensure that emerging risks are properly understood, documented, and, where possible, transferred.
As geopolitical tensions in the Middle East continue to evolve, many companies are reassessing their exposure to financial and operational risks. For CFOs, the implications reach far beyond insurance: they affect cashflow, contractual stability, operational continuity, and even management liability. This article provides a concise overview of the critical areas finance leaders should review to ensure that emerging risks are properly understood, documented, and, where possible, transferred.
Reviewing Existing Insurance Coverage
One event in the past week or so that may not have hit the headlines as much as the Gulf is the liquidation proceedings by FINMA against MBaer Merchant Bank in Zurich. This was because of allegations of lax money laundering controls and further that they were actively helping clients from (particularly) Russia, Iran and Venezuela to circumvent sanctions. As a result, the US Treasury initiated proceedings to exclude the bank from the US financial system (the USD economy) which is one of the most extreme sanctions available to them on a foreign bank.
Cyber insurance has become another pressure point. Many policies exclude “state-sponsored attacks” or large-scale systemic events; two scenarios increasingly relevant as geopolitical tensions escalate. Directors & Officers (D&O) insurance also deserves scrutiny, especially regarding its territorial scope and whether it responds to crisis-driven or regulatory decisions made under conditions of uncertainty.
Liability insurance should be checked for its response to delays or non-performance, and companies involved in trade or logistics should revisit Marine, Cargo, and Trade insurance. In some cases, insurers may apply war-risk surcharges or even withdraw coverage altogether if conflict intensifies. Where bank guarantees or insurance bonds are used, CFOs must assess whether they remain callable in scenarios where cross-border fund transfers become restricted. Finally, travel insurance should be reviewed to ensure employee travel to countries surrounding the Persian Gulf is still covered.
Understanding the Financial Impact
CFOs should anticipate that insurance premiums may rise at upcoming renewals and that current limits may no longer reflect the organisation’s true risk exposure. Sub-limits on critical policies may be exhausted quickly during a crisis, making it prudent to evaluate whether additional insurance such as cyber or political-risk cover should be budgeted for. The finance team may also consider whether parts of these increased costs can be passed on to key business partners.
Managing the Risk of Uninsured Loss
Not all consequences of a geopolitical crisis are insurable. CFOs should identify potential scenarios where the company may face losses without any insurance solution, such as indirect supply-chain shocks, contractual penalties, or regulatory actions. This is also the moment to assess the organisation’s internal capacity to absorb risk and to clearly document where the company is effectively self-insuring.
Strengthening Contract Management and Notification Processes
One of the most easily overlooked areas is the organisation’s formal obligation to notify insurers or banks of significant changes in risk. Timely communication is essential to maintain coverage and to avoid disputes later. Companies should also ensure that any potential force majeure event is properly documented and that insurance coverage remains aligned with the terms and expectations set in commercial contracts.
Is our system prepared for the influx of capital which on the face of it seems legitimate, but when we dig down it is the property of sanctioned individuals, corrupt officials, criminals and worse? Are our banks more morally upright than MBaer? History suggests this may not be the case.
Governance and Management Liability Considerations
Finally, insurance-related decisions should be elevated to management level and formally documented. This includes discussions around operational restrictions, supplier changes, and any investments made to enhance security or resilience. Such documentation is vital for the protection of senior management under D&O policies, particularly if decisions are reviewed in hindsight.
Gabriela Janečková
GrECo Czechia
T +420 722 985 347
