Contingent risk insurance

Contingent risks refer to known potential risks, such as those arising from legal disputes, the occurrence of which is still uncertain at the time of assessment.

In the run-up to a transaction, risks relating to the target company are regularly identified which, if they were to materialise, would result in significant financial disadvantages. If the parties involved have differing views regarding the probability of occurrence, the financial valuation and the impact on the purchase price, this can cause contract negotiations to stall. In this context, the financing of the project may also face significant hurdles, as substantial risks represent a factor of uncertainty regarding the return on investment.

Whilst W&I insurance only covers unknown risks, contingent risk insurance allows companies to hedge against identified but uncertain risks and to bridge difficult negotiating points as well as genuine deal-breakers. It can provide the necessary assurance to financing partners and have a positive impact on the financing terms.

Contingent risk insurance can be used independently of a transaction. Here, too, it hedges a significant risk specific to the company. This is one option, for example, when companies wish to gain definitive certainty regarding provisions to be made or questions relating to company valuation.

Dealing with identified critical risks requires a tight schedule. The efficient and dedicated advice provided by Funk M&A and Tax Solutions enables you to assess even complex scenarios in a short space of time and secure the best possible coverage with Contingent Risk insurance.