CONTENTS - Capgemini

Economic conditions
The Group’s growth and financial results may be adversely affected
by a general downturn in the IT service sector or in one of the
business segments in which Capgemini has significant exposure. A
shake-up resulting in a change of ownership at one of Capgemini’s
clients or a decision not to renew a long-term contract may have
a negative effect on revenue streams and require cost cutting or
headcount reduction measures in the operational units affected.
8.5 Insurance
The Group Insurance Manager, who reports to the Chief Financial
Officer, is responsible for all non-life insurance issues. Life
insurance issues, which are closely related to employee compensation
packages, are managed by the human resources function
in each country.
Group policy is to adjust insurance coverage to the replacement
value of insured assets, or in the case of liability insurance, to an
estimate of specific, reasonably foreseeable risks in the sector in
which it operates. Deducticles are set so as to encourage operational
unit managers to commit to risk prevention and out-of-court
settlement of claims, without exposing the Group as a whole to
significant financial risk.
Commercial general liability and professionnal indemnity
This type of coverage, which is very important to clients, is taken out
and managed centrally at Group level. Cap Gemini S.A. and all subsidiaries
over which it exercises direct or indirect control of more than
50% are insured against the financial consequences of commercial
general liability or professional indemnity arising from their activities,
under an integrated global program involving a range of lines
contracted with a number of highly reputable, solvent insurers. The
terms and conditions of this program, including limits of coverage,
are periodically reviewed and adjusted to reflect trends in revenues
and changes in the Group’s activities and risk exposures.
The primary layer of this program, totaling €30 million, is reinsured
through a consolidated reinsurance captive company and has been
in operation for several years.
Property damage and business interruption
Capgemini operates from premises located in many countries and,
within most of these countries, operates at a number of sites. There
are approximately 400 of these sites in total with an average floorspace
of slightly less than 2,200 m 2 . Some of the Group’s consultants work
off-site at client premises. This geographical dispersion limits risk, in
particular the risk of loss due to business interruption, arising from
an incident at a site. The biggest outsourcing site, which has disaster
recovery plans in place to ensure continuity of service, represents
less than 4% of Group revenues. The Group’s largest site, which
is located in India, employs 4,000 people in a number of different
buildings. No building at any of the Group’s sites houses more than
1,800 employees.
This dispersion means that insurance policies covering property
damage and consequential business interruption are contracted and
managed locally.
Other risks
Directors’ and Officers’ liability insurance, travel assistance and
repatriation coverage for employees working away, and crime and
fidelity coverage (especially for information systems) are managed
centrally at Group level via global insurance policies. All other risks
– including motor, transport and employer liability – are insured
locally using policies that reflect local regulations.
The Group has decided not to insure against employment practices
liability risks, given its preventive approach in this area. Pollution
risks are low in an intellectual services business, and Capgemini does
not insure against these risks in all countries in which it operates.
The Group has also decided that, unless coverage is compulsory and
readily available, it is not worth systematically insuring against terrorism-related
risks. Certain risks are excluded from coverage under
the general conditions imposed by the insurance market.
ANNUAL REPORT 2006 Capgemini
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