Thursday, January 5, 2012
Thursday, November 10, 2011
Tuesday, October 19, 2010
Informational Theft: On the Rise
For the first time in history a recent study conducted by Kroll Annual Global Fraud Report, revealed that theft of informational and electronic data has surpassed physical (intrinsic valued) theft. The study released the following statistics:
The findings reveal that theft of information or assets was reported by 27.3% of companies over the past 12 months, up from 18% in 2009. In contrast, reported incidences of theft of physical assets or stock declined slightly from 28% in 2009 to 27.2% in 2010. ("Kroll")
One of the main factors influencing this rise is that informational data is becoming more and more mobile and few companies have the proper controls in place. How many of your employees have a mobile device, a computer, or access to shared files over your computer network? Companies need to regularly evaluate how they are controlling access to information within their organization to ensure they are keeping pace with technological advancement.
According to the Kroll Annual Global Fraud Report, fraud is becoming more prevalent among inside employees. The companies analyzed in the report show that junior employees and senior management were the most likely perpetrators at 22% each, followed by agents or other intermediaries at 11%. The proportion of fraud carried out by these employees ranged from 50% to 60% in North America. ("Kroll")
Now the question arises: I thought I had coverage under my corporate crime policy?
Unfortunately, most carriers are going to deny coverage pointing first to the employee theft insuring agreement. This agreement refers to covered property as "money", "securities", and "other property". The term "other property" is defined as tangible property other than money and securities having intrinsic value. If the data is printed out then it would be considered tangible, but not if it is located on a flash drive, mobile device, or an electronic file.
There are some cases where the crime policy may respond depending upon the claim scenario and the endorsements included on your crime policy. An example where coverage may be available is if one of your employees is working at a client's facility and your employee steals electronic data that causes a financial loss to your client. It is still uncertain rather or not a carrier will pay the insured who can turn around and indemnify their client, even if electronic data is considered a covered property. The "Clients' Property Endorsement" must be included on the policy for the possibility of a claim payout. The endorsement states "that the insurer will pay for loss of money, securities or other property sustained by the named insured's client resulting from theft committed by an identified employee acting alone or in collusion." ("Malecki")
Recommended Risk Management Procedures:
1. Control Access
2. Conduct Due Diligence of partners, vendors, and employees
3. Be relentless in attacking Intellectual Property Piracy
4. Record Trademarks with the US Customs & Border Protection Agency
5. Purchasing a Cyber Liability Policy
Now is the time to ensure that your company is properly protected from informational and data theft.
References:
Kroll. Information Theft At Global Companies Surpasses All Other Forms of Fraud for First Time. 18 October 2010. http://www.kroll.com/news/releases/index.aspx?id=23082
Malecki, Donald. Rough Notes. November 1, 2002.
The findings reveal that theft of information or assets was reported by 27.3% of companies over the past 12 months, up from 18% in 2009. In contrast, reported incidences of theft of physical assets or stock declined slightly from 28% in 2009 to 27.2% in 2010. ("Kroll")
One of the main factors influencing this rise is that informational data is becoming more and more mobile and few companies have the proper controls in place. How many of your employees have a mobile device, a computer, or access to shared files over your computer network? Companies need to regularly evaluate how they are controlling access to information within their organization to ensure they are keeping pace with technological advancement.
According to the Kroll Annual Global Fraud Report, fraud is becoming more prevalent among inside employees. The companies analyzed in the report show that junior employees and senior management were the most likely perpetrators at 22% each, followed by agents or other intermediaries at 11%. The proportion of fraud carried out by these employees ranged from 50% to 60% in North America. ("Kroll")
Now the question arises: I thought I had coverage under my corporate crime policy?
Unfortunately, most carriers are going to deny coverage pointing first to the employee theft insuring agreement. This agreement refers to covered property as "money", "securities", and "other property". The term "other property" is defined as tangible property other than money and securities having intrinsic value. If the data is printed out then it would be considered tangible, but not if it is located on a flash drive, mobile device, or an electronic file.
There are some cases where the crime policy may respond depending upon the claim scenario and the endorsements included on your crime policy. An example where coverage may be available is if one of your employees is working at a client's facility and your employee steals electronic data that causes a financial loss to your client. It is still uncertain rather or not a carrier will pay the insured who can turn around and indemnify their client, even if electronic data is considered a covered property. The "Clients' Property Endorsement" must be included on the policy for the possibility of a claim payout. The endorsement states "that the insurer will pay for loss of money, securities or other property sustained by the named insured's client resulting from theft committed by an identified employee acting alone or in collusion." ("Malecki")
Recommended Risk Management Procedures:
1. Control Access
2. Conduct Due Diligence of partners, vendors, and employees
3. Be relentless in attacking Intellectual Property Piracy
4. Record Trademarks with the US Customs & Border Protection Agency
5. Purchasing a Cyber Liability Policy
Now is the time to ensure that your company is properly protected from informational and data theft.
References:
Kroll. Information Theft At Global Companies Surpasses All Other Forms of Fraud for First Time. 18 October 2010. http://www.kroll.com/news/releases/index.aspx?id=23082
Malecki, Donald. Rough Notes. November 1, 2002.
Monday, October 11, 2010
Law Banning Texting while Driving
You may have already heard, but I wanted to give you a heads up that Cincinnati has now implemented a ban on texting and accessing the internet on your mobile device while driving. Furthermore, Kentucky implemented a similar law back in July.
As a corporate entity it is imperative that your employees do not text or access the internet while driving on company business. If your employees are using their mobile devices while driving they are not only opening the company (and themselves) up to fines, but are also increasing the risk of auto accidents and negligent entrustment law suits. Have you reviewed your motor safety program recently? Have you implemented the proper procedures?
A few statistics to share:
- 80% of auto accidents are caused by driver distraction within 3 seconds of the event.
- 65% of near accidents are caused by driver distraction.
- Estimates show that 57% of drivers text while operating a motor vehicle.
- A study done by the American Automobile Association found that 46% of teenaged drivers text while driving and that 37% say that texting is extremely or very distracting.
http://news.cincinnati.com/article/20101008/NEWS0108/10090319/Chief-Look-for-texting-drivers
As a corporate entity it is imperative that your employees do not text or access the internet while driving on company business. If your employees are using their mobile devices while driving they are not only opening the company (and themselves) up to fines, but are also increasing the risk of auto accidents and negligent entrustment law suits. Have you reviewed your motor safety program recently? Have you implemented the proper procedures?
A few statistics to share:
- 80% of auto accidents are caused by driver distraction within 3 seconds of the event.
- 65% of near accidents are caused by driver distraction.
- Estimates show that 57% of drivers text while operating a motor vehicle.
- A study done by the American Automobile Association found that 46% of teenaged drivers text while driving and that 37% say that texting is extremely or very distracting.
http://news.cincinnati.com/article/20101008/NEWS0108/10090319/Chief-Look-for-texting-drivers
Thursday, July 22, 2010
Joint Ventures: Possible Coverage Gap?
Due to the economy and other contractual issues, there has been a rise in the use of joint ventures (JV). This has allowed contractors to expand their traditional markets and preserve bonding capacity for other projects. In most cases the joint venture will have its own insurance program in place, but if the limits are inadequate the JV's participants are responsible for additional liabilities. Usually the contractor with the deeper pockets will be called upon to foot the bill (claim).
The standard commercial general liability (CGL) policy provides no coverage with respect to joint ventures that are not listed on the policy; therefore, JV participants will have no coverage under their own policies for liabilities arising out of the JV unless they take proactive steps to include all current and past joint ventures as insureds on the policy. To avoid the possibility of oversights that can produce coverage gaps, contractors can request a blanket joint venture coverage endorsement that provides coverage on an excess basis over policies written specifically for the joint venture. In this way, the contractor receives the full benefit of the coverage provided by the joint venture and also has protection under its own policy after the JV's coverage expires or is exhausted by claims.
Note that the coverage granted by this endorsement applies only to the named insured contractor; neither the joint venture itself nor other participants have coverage under the named insured contractor's policy. However, to reduce the possibility that this policy becomes the sole source of recovery for a claim, the JV agreement should require the other participants to also arrange joint venture coverage on their CGL policies.
The standard commercial general liability (CGL) policy provides no coverage with respect to joint ventures that are not listed on the policy; therefore, JV participants will have no coverage under their own policies for liabilities arising out of the JV unless they take proactive steps to include all current and past joint ventures as insureds on the policy. To avoid the possibility of oversights that can produce coverage gaps, contractors can request a blanket joint venture coverage endorsement that provides coverage on an excess basis over policies written specifically for the joint venture. In this way, the contractor receives the full benefit of the coverage provided by the joint venture and also has protection under its own policy after the JV's coverage expires or is exhausted by claims.
Note that the coverage granted by this endorsement applies only to the named insured contractor; neither the joint venture itself nor other participants have coverage under the named insured contractor's policy. However, to reduce the possibility that this policy becomes the sole source of recovery for a claim, the JV agreement should require the other participants to also arrange joint venture coverage on their CGL policies.
Monday, July 19, 2010
Contingency Planning: a "Living Document"
According to a recent study by "American Agent and Broker" 50% of companies have a distaster recovery plan in place, but more than 60% of these companies have not revised the plan or conducted mock drills in the past 12 months.
From my perspective as a risk consultant and broker, the more time a company spends on preparing and planning for recovery the less time they actually spend in the recovery stage. Most insurance buyers know that commercial insurance is a form of catastrophic coverage, but fail to realize is that "insurance" will not address the claim proactively. Taking a proactive approach to a catastrophe will help mitigate the loss and keep the business going through a loss. A proactive approach would include the following:
1. Develop a committee to revise and/or create your company's Contingency Plan. Include your insurance broker on the committee.
2. Conduct a Mock Drill
3. Revise
4. Create a plan for the committee to meet on a semi-regular basis.
Generally, companies that are uprepared suffer two fates from a catastrophe: either they lose income or go out of business.
Enclosed is a guide to Contingency Planning.
From my perspective as a risk consultant and broker, the more time a company spends on preparing and planning for recovery the less time they actually spend in the recovery stage. Most insurance buyers know that commercial insurance is a form of catastrophic coverage, but fail to realize is that "insurance" will not address the claim proactively. Taking a proactive approach to a catastrophe will help mitigate the loss and keep the business going through a loss. A proactive approach would include the following:
1. Develop a committee to revise and/or create your company's Contingency Plan. Include your insurance broker on the committee.
2. Conduct a Mock Drill
3. Revise
4. Create a plan for the committee to meet on a semi-regular basis.
Generally, companies that are uprepared suffer two fates from a catastrophe: either they lose income or go out of business.
Enclosed is a guide to Contingency Planning.
Monday, May 17, 2010
Say "NO" to Texting while Driving!
If your company has vehicles on the road then texting while driving is becoming a major risk for you. Talking on a cell phone without a hands free device creates a major risk exposure, but texting while driving poses an even larger threat. This threat not only affects companies that employ drivers and operate fleets, but to others on the road. A Virginia Tech Transportation Institute study found that texting while driving increases the risk of being in an accident by 23 times. As the report states, “Anti-texting laws do not protect businesses from irresponsible employees.”
Due to the increase of accidents caused by distractions (including texting) half of the states in the U.S. have made decisions to outlaw texting while driving. As you know, sometimes a law is not enough to discourage some of your employee’s actions.
So how can you control the actions of your drivers when they’re on the road?
The Solution: TextArrest (https://textarrest.com/)
This is a smart phone application that automatically turns off text messaging and calling functions while the phone is in motion.
The features include:
Due to the increase of accidents caused by distractions (including texting) half of the states in the U.S. have made decisions to outlaw texting while driving. As you know, sometimes a law is not enough to discourage some of your employee’s actions.
So how can you control the actions of your drivers when they’re on the road?
The Solution: TextArrest (https://textarrest.com/)
This is a smart phone application that automatically turns off text messaging and calling functions while the phone is in motion.
The features include:
- Integration with a phone’s GPS system to determine the speed of a moving vehicle.
- Automatic switching off of text messaging and calling functions after a phone is detected to be traveling faster that 5 mph.
- An auto response message from the driver that informs people sending text messages that their messages will be delivered once the user stops driving
Fleet managers and risk managers may want to consider the option of having complete control of their driver’s cell phone use while operating a company vehicle.
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