Does Mother Nature Hate Us?

After hearing about yesterday’s massive tornado that demolished sections of the Southeast and waking up today to see the towns from Alabama, to Georgia and Virginia flattened, I can only watch in horror and wonder why storm after storm has wreaked havoc throughout the United States recently.

164 tornadoes were reported, spanning from Mississippi to New york, the worst outbreak since 1974. So far, the death toll stands at 230 and is likely to climb.

In risk management, we always say to prepare for the unexpected. But from looking at the video and pictures from yesterday’s storm, it seems almost impossible to prepare for something of that magnitude.

Increasing the Board’s Risk Intelligence

Here’s a good talk about risk at the board-level. (video via Deloitte)

An excerpt from Henry Ristuccia, partner at Deloitte and co-leader of its governance and risk management services division.

“What we’ve found as a result of lessons learned from the economic crisis and credit crisis is that major stakeholders feel that traditional risk management has failed or had shortcomings. What I mean by that is that when you talk to legislators and regulators … there’s a real focus on improving the corporate governance, the risk management-type activities in organizations. When you turn that to independent directors and boards, independent directors are looking for greater transparency, better mechanisms to manage risk at a very high level in the organization. Generally speaking, it’s the real critical risks that we call the ‘value-killer’ risks.”

Worth watching for anyone interested in raising the profile of risk management in their organization and how strategic risk management — the future of the discipline — can more quickly evolve.

Cloud Computing: Convenience Versus Confidence

Cloud computing has become a convenient and cost efficient way for companies to store data while using remote, shared servers located in the “cloud.” But what is cheap and easy, isn’t always safe.

Take, for example. The company branched out into the cloud computing business five years ago and has since offered computing resources to thousands of businesses — most of them small with a low likelhood of having data backup and recovery services (bad risk management!).

Last week, that lapse in risk management was felt after’s cloud services crashed, disrupting web services for companies as large as Pfizer and as small as FourSquare.

The Amazon interruption, said Lew Moorman, chief strategy officer of Rackspace, a specialist in data center services, was the computing equivalent of an airplane crash. It is a major episode with widespread damage. But airline travel, he noted, is still safer than traveling in a car — analogous to cloud computing being safer than data centers run by individual companies.

As of this morning, many of the affected sites are back online, though “some historical data might be missing,” according to Chartbeat, a company that monitors the online presence of websites.

The risks of cloud computing is not a new topic among business owners, CIOs and risk managers — far from it. For years, talk has circled regarding privacy, compliance and legal issues. One recent article in PC World examines the risks of cloud computing. It covers topics such as who accesses your data, regulatory compliance and (probably most importantly) data loss and recovery.

Corporate cloud computing is expected to grow rapidly, by more than 25% a year, to $55.5 billion by 2014, according to International Data Corporation estimates. And as the popularity of cloud computing grows, so will the potential risks. With that in mind, companies are wise to evaluate such perils and plan for what could go wrong with such a modern technology marvel.

The Most Extreme Workers Comp Fraud Cases

In this position, I receive so many press releases that it’s difficult to keep up and some sit in my email inbox unread because they don’t relate to this industry in the slightest way. However, I recently received one press release that not only caught my attention, it amazed me and inspired me to write this post about it.

It tells of a man named Paul Colbert, who is the president and CEO of Meridian Investigative Group, a workers comp investigation company. With more than a decade of experience, Paul has seen some of the worst workers comp fraud cases in history. Below are a few of the more severe ones he shared in the email (names have been changed):

  • Kristy G: She alleged that her right foot was so injured that she couldn’t walk for for extended periods of time or be a productive member at her place of employment. Video caught her walking into the doctor’s office with her crutches and ambulatory aid for her ankle. Later, she was videotaped walking around without the crutches and holding her boot in her hand, trying to hit someone with it and then walking off quickly without any aid or signs of disability.
  • Kathy V: Her alleged injury was to her neck and shoulders, and in her claim, she indicated that she gets regular injections in her arm for pain. Her pain was so severe, that she could not work. Video caught her riding in a rodeo competition on two different occasions, after her date of injury.
  • Eddie R: His alleged injury was to his back, left ankle and heel. Again, his injuries were to such a degree that he could not work anymore. Video captured Eddie handily pushing his pickup truck after it stalled.
  • Burt F: Burt filed a claim indicating the he was allegedly legally blind due to his workplace injury, but apparently not blind enough to prevent him from working as a maintenance man at an apartment complex. He was captured on video driving a golf cart and performing maintenance duties.

Do you know of any extreme workers comp fraud cases?