The word of the day for many business process outsourcing (BPO) and technology services companies is growth. This is especially true for companies operating in nearshore markets. The outsourcing industry in Latin America and the Caribbean is booming with more investment, job creation and general interest than ever before.
Expansion brings excitement and opportunity, but more customers and employees also increase operational challenges. This is on top of the lingering negative effects of the Covid-19 pandemic, supply chain disruptions, inflation and policy changes in all jurisdictions. Businesses today must operate under more adverse conditions and manage new risks.
How can companies integrate new compliance needs as they grow? What has changed for nearshore companies in their relationship with their insurers? What has been the impact of the pandemic on compliance requirements and insurance policies in nearshore markets?
Nearshore Americas spoke with Susana Sierra, CEO of BH Compliancea company with more than a decade of experience in the compliance market, and with Natalia Delisser, Business Manager at articleto answer some of these questions.
Greater needs for health and cyber insurance
Latin America and the Caribbean remains one of the regions most affected by cybersecurity threats. Pandemic-induced remote working conditions have exacerbated this risk.
“When it comes to cyber insurance coverage, external threats such as scam, phishing and ransomware have intensified,” said Natalia Delisser. “Cyber insurance policies have been undervalued for the level of exposure, and markets have suffered massive losses, leading to reduced capacity, increased retention of policyholders and reduced limits that markets were ready to offer.”
For Delisser, markets for cybersecurity and other financial lines are increasingly constrained in terms of pricing and underwriter availability due to incidents of ransomware security breach claims. Ransomware attacks have increased in size and frequency over the past two years in the littoral.
“Cyber insurance underwriting has begun to embrace a new level of due diligence and high levels of security screening. In addition, the scope of coverage is also reduced,” Delisser pointed out.
“With more work from home operations, underwriters are placing more emphasis on system security, such as multi-factor authorization (MFA). Without certain security standards, underwriters will withdraw coverage. Customers are also more vigilant; they follow up on contractual requirements by making sure they see the documents. And during the business development or sales process, assurance is an integral part of vendor selection,” she added.
When it comes to cybersecurity, the BPO sector is very sensitive to Data protection, as most companies handle third-party data in multiple jurisdictions. Delisser explains that data protection laws now place a substantial level of exposure on entities, including those in the BPO sector. More emphasis is placed on reporting data breaches; therefore, the need to have coverage for third-party claims arising from such violations has increased dramatically.
“This is often a contractual requirement of the customer, as customer data is also at risk. Customers want to make sure they are adequately covered and in many cases demand full compensation from BPOs for any act they might be held responsible for without recourse against them. The subrogation waiver requests that we have seen are an example of this,” Delisser explained.
“In many cases, [clients] demand full compensation from BPOs for any act for which they may be held liable without recourse against them” – Natalia Delisser
As the general insurance industry experiences complex changes, employers and providers have had to focus on one issue in particular: Health care. The pandemic has forced employers to take action and put employee health at the center. Companies and their workers have paid more attention to insurance policies as the health crisis has dramatically changed the way people interact with their workplace.
“In general, employees are more interested in wellness and have asked for things like gym memberships,” Delisser said. “In Jamaica, our employees have access to an online fitness club that provides 24/7 access to a wellness portal as part of a new, more holistic coverage. In Guyana, workers benefit improved benefits and employees pay less for health care for themselves and their families.For employee health coverage in Saint Lucia, we purchase the policy directly from the provider, they provide virtual onboarding and enrollment.
Adjusting to post-scandal compliance standards
The pandemic has not been the only factor driving significant changes in business practices. With the health crisis, as well as the new economic and political realities, there has also been a change in the regulatory and compliance climate.
In recent years, Latin America and the Caribbean has been the epicenter of major corruption cases. This has had an impact on the general perception of business among policy makers and the public.
“There is a growing anti-business sentiment in social movements and the population. This is mainly due to a perceived notion of corruption or simply wrongdoing, but I think it is also due to the fact that businesses in the region do not know how to properly present what they are doing,” said Susana Sierra.
Sierra leads BH Compliance to assist companies in their anti-corruption efforts. The company now uses artificial intelligence (AI) and blockchain technology to monitor and diagnose compliance issues, giving it a complete view of how industry regulatory requirements look and apply. private.
For Sierra, the problem of corruption is generally not linked to malicious intent, but rather to the attention companies pay to results, often ignoring processes and protocols.
“When you sell more or suddenly your operating costs go down or you finally get that contract, nobody asks questions. But it is in these interactions with suppliers or officials that we must also pay attention. By doing so, companies create a culture of integrity that really helps business,” Sierra explained.
“There is a growing anti-business sentiment in social movements and the population” – Susana Sierra
BH Compliance often finds that even when companies have internal channels to file complaints about corruption or other violations, these channels are routinely underutilized due to company- and country-specific constraints. cultural patterns.
“In Latin America, people usually don’t want to complain, but sometimes it goes beyond that. For example, we find that approximately 20% of companies do not follow their own policies for interacting with public officials,” Sierra added.
For Sierra, there must be more social sanctions for companies and public officials who engage in acts of corruption.
“Chile passed the Corporate Criminal Liability Law in 2010, and other countries have followed suit, but these laws remain too reactive. We need more on data protection, consumer rights and anti-corruption,” she concluded.