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Mining companies in Indonesia are facing an increasingly complex operating environment, as risks including natural catastrophe, pollution and underinsurance create obstacles to growth, according to Marsh, an insurance broker and risk advisor.

Natural catastrophes and an increased attention on enviromental regulation are forcing companies to review their insurance and risk management programs to ensure they have the appropriate levels of protection in place to withstand this changing environment.

Global commodity price volatility and the rising cost of raw materials such as steel are also fueling a rise in rebuilding costs for mining facilities. 

By failing to update their insured values routinely, mining companies are potentially exposed to the risk of underinsurance.

Marsh recommends that mining companies regularly monitor the insured values of their business-critical assets to ensure they are adequately covered in the event of a loss.

“Although Indonesia’s resource-rich mining sector is benefiting from continued foreign and local investment, the operating risks it faces are becoming more complex," says Ian Brown, Managing Director and Mining Practice Leader for Marsh in Asia.

Brown notes that earthquakes, floods and tightening regulation around environmental protection all pose significant challenges to firms being able to maximise their returns and operational efficiency.

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