That’s where the world’s most unusual insurance policies come into play. Take Troy Polamalu for example. The Pittsburgh Steelers strong safety hasn’t cut his mane in a decade out of devotion to his Samoan ancestors. His flocks landed him an endorsement deal with Head & Shoulders and as a risk management measure, the company, just this week, took out a $1 million policy on his hair. But that’s not the only oddly insured part of the body that has caught the attention of the media.

David Beckham, the hunky English soccer star, wanted to protect that which he uses to make millions as a footballer. With that in mind, he took out a $195 million deal to protect not only his legs, feet and toes, but also his face in the event of disfigurement (since he uses his good looks to score endorsement deals).

Jeff Beck, an iconic English rock guitarist, was ranked 14th in Rolling Stone Magazine’s list of the “100 Greatest Guitarists of all Time.” To protect his famed fingers, Beck took out an insurance policy of $1 million — per finger. Apparently, he came to realize he needed protection after slicing off the tip of his index finger while slicing carrots. Maybe he’ll hire a chef as an additional risk management measure.

Bruce Springsteen has a million dollar voice — literally. The New Jersey-bred crooner insured his voice with the Lloyd’s of London for $6 million. Keep on rockin’ Bruce.

To see the entire list of the “Top 10 Oddly Insured Body Parts,” published by Time, click here.

What’s the best type of insurance to cover businesses against disasters?

Brian Smith: There are two areas of coverage that must be considered when facing the decision to purchase business insurance: property and business interruption. Property insurance will protect against damage to the physical condition of the business along with the items that sustain operations, such as equipment and fixtures. Property insurance is a mainstay in commercial programs, oftentimes required and rarely overlooked. Business interruption insurance, however, is often undervalued; it is the most critical program needed to sustain operations during a disaster. There are seven points a business owner should consider if questioning the need for business interruption coverage:

1. It allows the owner to recoup lost sales and income of the business;
2. While the business is down due to the disaster, it will allow the operations to continue during rebuilding;
3. Income and profits are protected;
4. By staying afloat, the business will be able to retain key clients and contracts;
5. Business interruption insurance allows for the employer to keep ALL employees;
6. As mentioned, property insurance and business interruption claims are often LARGER than the property loss;
7. And finally, the business will likely receive a more rapid and equitable loss settlement on the property claim.

Do different types of companies require different types of insurance and does the business’ location matter in such a decision?

BS: Each company will have its own unique risks associated with it. These must be evaluated by a commercial insurance professional to determine the right coverage for the identified exposures. Taking into consideration the location of a business, however, is one of the key factors. Distance from the coast is one factor, due to exposure to natural disasters such as hurricane and flood. In this case, flood is highly recommended and may be required based on banking terms or contractual needs. An additional type of coverage within the business interruption arena is contingent business interruption. This type of insurance protects the business against a loss due to a dependency on one buyer, supplier, manufacturer or leader property such as in a mall or shopping plaza.

Is now a good time to reassess commercial insurance coverage? If so, why?

BS: The answer here is a resounding YES! Commercial insurance rates are very low at this point. The insurance industry is facing its sixth year of a “soft market,” where insurance companies have lowered rates to unprecedented levels. Insurance program development during this time is highly recommended due to opportunities involving greater coverage, competitive rates and new client demands on both the insurance companies and insurance agencies. Engaging a commercial insurance professional is the best way to see where improvements can and should be made based on operation, location and physical hazards.

Is National Preparedness Month a tool to encourage businesses to analyze their stage of disaster preparedness? How?

BS: I believe it is. The U.S. Department of Homeland Security is shepherding this program at the state and national level. Accompanied by several commercial and personal insurance providers/groups, this national marketing campaign can bring a level of awareness needed for home and business exposures. Coinciding the hurricane season, any awareness program that brings to light what needs to be considered in the event of disaster is always welcome.

What else should businesses know about the importance of being covered from disaster?

BS: Business owners should be aware of the possibility that current insurance programs may be under-estimated or inadequate. A comprehensive review of key items identifying areas of exposure should be considered on an annual basis. Review of current insurance policies is necessary to ensure coverage levels are accurate as well as appropriate. New or changing business operations can have a substantial impact on the monetary needs of a company should it be impacted by a natural disaster. Insuring these exposures properly can only be done if each is understood by the owner and insurance agent and steps are taken to include these values on the current or renewing program.

Someday, a major hurricane will strike New York City. Government forecasters concede they’ll be unable to give the City much notice, while the City’s emergency planners admit evacuation is impossible. It’s a recipe for disaster on a scale to dwarf Hurricane Katrina’s devastation of New Orleans, potentially leading to the largest natural catastrophe in American history.

As we all know, NYC is very much unprepared for the type of storm that frequents the warmer waters of the Gulf of Mexico. Some may recall the story of the Great Hurricane of 1938 that struck eastern Long Island and New England, killing more than 700 people, destroying more than 50,000 buildings and knocking down more than a quarter billion trees.

If a serious hurricane were to strike the NYC area today, it would undoubtedly be one of the most costly natural disasters in U.S. history. As the Insurance Information Institute states, New York has the highest total exposure to a storm.

Not to be a fear monger, but now let us look at the projected path of Hurricane Earl, courtesy of the National Hurricane Center (NHC). I understand that this is a projection through Saturday, which, when talking about the path of storms, is long-term and certainly not definitive. Still, the image is frightening (note how close to NYC the storm is projected Friday afternoon/evening):

Moments ago, Hurricane Earl reached category 3 status with winds near 120 mph, according to the NHC. We will keep an eye on updates from the center.

This is a good time for businesses to review their business continuity and disaster preparedness plans. There is no such thing as being too prepared.

You may remember back in February 2009 when the Iridium 33 and Russia’s Cosmos 2251 satellites collided in orbit somewhere above Siberia. The crash of the two objects resulted in more than 600 pieces of debris larger than a tennis ball being strewn about in space, adding to what scientists and researchers call space debris or space junk.

The problem with the collision of satellites (many of which are non-working and have been abandoned in space to drift freely for eternity) is that it creates added debris in an already cluttered lower earth orbit, creating a hazard to operational satellites. The debris can also pose a threat to space stations — in March of last year, the crew of the international space station was forced to take cover in its escape capsule after learning that a piece of debris moving at 20,000 mph was heading towards them. Though the object missed the space station, it won’t be the last close call.

We covered space risk in our May 2009 issue, stating that scientists are concerned about the “dangerous and possibly irreversible cycle of wreckage.” The worst case scenario for the problem of space debris is known as the Kessler Syndrome (named after NASA scientist Donald J. Kessler), a scenario in which the volume of space debris in lower earth orbit is so high that the risk of further collisions increases to the point where launches become nearly impossible.

A space so cluttered with junk that the U.S. military (or any military for that matter), NASA or any weather, cable or GPS satellites cannot launch? Scary indeed.

The latest issue of the Economist explores the ongoing problem of space pollution, stating that:

At orbital velocity, some eight kilometers a second, even an object a centimeter across could knock a satellite out. According to the European Space Agency, the number of collision alters has doubled in the past decade.

But there are possible solutions to clearing the massive amount of space junk out there. The following are a few ideas put forth in the aforementioned article:

1. Use ground-based lasers to change the orbits of pieces by vaporizing their surfaces. Apparently, the American armed forces claim one laser facility could complete the job in a matter of three years.
2. Alliant Techsystems has proposed building special satellites enclosed in multiple spheres of strong, lightweight material. Debris that came into contact with the satellite would lose momentum and velocity with each collision. “As a bonus, many object large enough to cause damage would be shattered by the collision into fragments too small to cause serious harm.”
3. Robots. That’s right — robots. Many space agencies are considering the option of sending robots into space to dock with dead satellites and fire rockets to either boost them into an uninhabited orbit or deorbit them completely.

Whatever these agencies decide, something should be done quickly to remedy the situation. For every day that passes, more space junk accumulates. Let us not come to realize the dreaded Kessler Syndrome.

From the August 21st - 27th, 2010 issue of the Economist.

380 million eggs have now been recalled from an Iowa egg production facility in what some are calling the largest egg recall in history.

Unfortunately, as one of the nation’s top food safety advocates predicts, the outbreak will likely grow over the coming weeks. So far, close to 2,000 people have been sickened with salmonella from the bad eggs, with that number pretty much guaranteed to grow.

At the center of this massive recall is the family-run egg farm Wright County Eggs, based in Galt, Iowa. The owner of this company is Jack DeCoster, 75, who could be labeled a bad egg if one reads the litany of lawsuits and plant health violations he’s had filed against him in the past. Let’s take a look at two complaints:

One of the more egregious was filed in the summer of 1996 when DeCoster was made to pay more than $3 million in fines after the U.S. Labor Department found dead chickens being picked up by workers with bare hands. The complaint also stated that DeCoster’s workers also lived beside manure and rat-infested trailers, according to the Associated Press. The complaint led to a boycott of DeCoster’s eggs by several major supermarkets. In 2000, the Iowa attorney general dubbed DeCoster a “habitual violator” of the state’s environmental laws and ordered him to pay a $150,000 fine. DeCoster had failed to properly dispose of the hog and chicken manure and had let it run into a nearby creek.

Add to that the 10 counts of animal cruelty DeCoster pleaded guilty to in regards to his company’s treatment of its chickens. Then, in June, he was ordered to pay “more than $100,000 in fines and restitution, a ruling that is considered one of the landmark animal cruelty cases in history.”

In seems ironic that new egg safety rules were put into place July 9 by the FDA to help reduce the risk of salmonella outbreaks. This risk management proposition:

Addresses several aspects of egg production, particularly spots where chickens and egg production seem most vulnerable to infection by Salmonella enteritidis. While the new regs only immediately effect the largest of the nation’s egg producers, those producers also account for the overwhelming number of eggs produced.

The average person would say Wright County Eggs failed to successfully implement this, and other, risk management measures. The outcome for any company that fails in this aspect is, most times, lost earnings, lowered market share and tainted reputation. Not a good mix.

A report published today by Fitch Ratings claims its stress-testing of European insurers based on their euro-zone sovereign exposures has resulted in no ratings actions. Fitch used the hypothetical scenario of a default on Greek government debt to carry out a stress test on its rated European insurance portfolio.

The agency believes that all companies in this portfolio would be able to withstand an external shock derived from a hypothetical Greek sovereign default, including an assumption of ancillary stress for other key euro zone nations.

And by “other key euro zone nations” Fitch is referring to the troubled economies of Portugal, Ireland, Spain and Italy, whose “sovereign risk may be a particular concern.” Taking this and other economic factors into concern, the ratings agency followed a two-step stress test process. First, Fitch identified insurers where sovereign risk may be a particular concern — those insurers with exposure to Greece, Portugal, Ireland, Spain and Italy. Second, the agency considered the impact of the implications of sovereign risk — meaning, they applied their stress test to selected companies/groups. Fitch considered the Greek default scenario from two perspectives: economic viewpoint and market value viewpoint.

Direct and indirect (realized and unrealized) investment losses are viewed by Fitch as the primary risks for insurers from sovereign debt. Any insurer rated above Greece’s current ‘BBB-’ level should be expected to be able to cope with the impacts of a hypothetical Greek default scenario. This was confirmed by the outcome of the stress test: all selected companies/groups passed the test.

Since Fitch believes the insurers in its portfolio can withstand the economic stress and the impact from potentially more severe mark-to-market movements, they have not taken any rating actions on its European insurance portfolio.

This good news comes on the heel of other optimistic European news that was publicized recently. After the European bank stress tests, only seven out of 91 banks were shown to need additional capital in a worst-case scenario — a shocking surprise. We must keep in mind, however, that these tests, though they consider deleterious situations, may not be rigorous enough and therefore, not the end-all be-all of the economic outlook.

But not all of the EU’s 27 member states are taking charge of their new responsibility. Spain, for one, has shown a lack of awareness when it comes to environmental risks, legislation and avenues of protection available. According to the Business Environmental Liability study, more than half of the 700 businesses studies in Spain did not have environmental liability coverage.

The survey also revealed that of those companies that said they had cover in place against environmental damage, only 10% had a policy that conformed to established regulations (Law 26/20071). Companies cited their multi-risk policy/financial guarantee, public liability and general business insurance policies as providing environmental risk protection. However, these products do not conform to the requirements of Law 26/20071 on Environmental Liability.

It seems apparent that many businesses in Spain do not fully understand the implications of the EU’s environmental liability directive. In fact, a whopping 65% of companies surveyed said they were unaware that the Spanish government has the ability to make it a requirement for these companies to have a fund, collateral or insurance to cover them from possible environmental damage.

Though numerous insurers jumped at the chance to offer environmental liability coverage to the EU market, a lack of demand has been evidenced from the beginning of the directive’s establishment.

Risk managers don’t seem to be “aware of how much of a strict regime is now in place and the cost of responding to that regime if you have a problem,” said Simon White, London-based environmental branch manager for XL Insurance.

Why is Spain a laggard when it comes to this topic? If the country’s businesses don’t get on board soon with the EU’s environmental liability directive, it will affect not only their bottom line, but also their reputation.

Tweets or Facebook posts on a company’s site can help or harm said company — and it’s a fine line between the two. For this issue, a social media policy should be put in place at any company that plays the social media game. If you want to take it a step further, a community manager should be responsible for all social media outlets that pertain to your brand.

But that’s not all a company has to worry about. As we all know, angry customers often take to the internet to air their grievances, often launching attacks on a company via Twitter or Facebook after a bad experience. Here are a couple of angry tweets aimed at your neighborhood pizza maker, Dominos:

But Dominos, unlike some companies, responds immediately to customer complaints on Twitter. It is obvious that the pizza chain employs several community managers to take care of such issues or forward the complaints on to the appropriate department. This, everyone, is a great example of the right way to use social media.

Another pioneer in the land of corporate social media is Delta. It was announced today that the commercial airline will now allow users to book flights directly on Facebook.

While it’s commendable that the company is looking to social media to boost sales, Delta is not the first airline to use the social web to reach consumers. Southwest, Virgin and event JetBlue have been communicating deals and information to customers via Twitter and Facebook for some time. I’d expect these airlines to start rolling out a similar sales feature to Ticket Window soon.

Examples of bad business twitter moves include not checking in regularly, mixing business with pleasure (make a separate personal account), mostly self-promotional tweets/posts and not helping others. Having a Twitter or Facebook page that represents your brand means responding quickly and directly and planning for the worst while expecting the best.

What’s the worst case scenario your brand could possibly suffer in a social media PR meltdown? That situation probably won’t occur, but by imagining the worst, you can craft “first line” responses ahead of time, so you won’t be caught off guard. That way you’ll be well prepared if sentiment around your brand suddenly begins to trend negative. This kind of brand take-down, should it occur, happens extremely fast—in a matter of hours.

So, while social media is a great marketing tool for every business, a professional and responsible manager should be in charge of all communication on the various sites and this person should be very well versed on the many risks of social media.

The group penned a letter to G. Steven Farris, chairman and CEO of Apache, a company that recently purchased $7 billion of oil and gas fields from BP. As the letter states:

“The April blowout at BP’s Macondo well in the Gulf of Mexico, and the explosion and fire on the Deepwater Horizon drilling rig that killed 11 workers, has led to one of the greatest environmentally-related destructions of shareholder value in history. The shareholder harm that has flowed from the BP spill has focused investor attention on governance, compliance and management systems needed to minimize risks associated with deepwater offshore oil and gas development worldwide.”

The 1-page letter (with 10 pages of questions and signatures) goes on — urging all companies, including Apache, involved in subsea deepwater drilling to be open and transparent with investors and stakeholders regarding the programs they have in place for managing risks. The questions submitted inquire into the amount of money spent on R&D with respect to safer offshore drilling technologies, contingency plans, lessons learned from BP Macondo and the well blowout, contractor selection and oversight and governance and management systems.

With pressure like this, it is hoped that the Exxon’s and BP’s of the world will be forced to answer tough questions regarding managing the extreme risk they encounter. Like every other public company, they must answer to the owners — the shareholders. Let’s hope they do . . . and do so truthfully.

The microblogging site has seen a flood of earnings tweets for the second quarter of 2010. Some, however, are doing this better than others. IR Web Report compiled a list of 10 public companies that are using Twitter as an investor relations tool — with comments on what they’re doing right and wrong. Here’s a snapshot:

URL: https://twitter.com/PGNewsUS
Followers: 5,166
Apps used: Twitterfeed, CoTweet, TweetDeck
# of Earnings Tweets: 14
# of Clicks from Tweets: 75
Comments: The tweets are coming from P&G’s media relations team, so strictly speaking their activity doesn’t qualify as IR. Except it does because investors don’t discriminate. The tweets are plain vanilla, no hashtags or tickers. There’s a bit of “spin,” but mostly the tweets are informative. Still, the company’s IR department should have it’s own account. It’s hard to find the signal when sales numbers are mixed in with soap suds. The low click-thrus suggest that earnings tweets on this account don’t resonate.

URL: https://twitter.com/Roche_com
Followers: 4,586
Apps used: CoTweet
# of Earnings Tweets: 21
Clicks generated: 182
Comments: Only company where I had to use a calculator to add up all the various clicks to their site! Probably the best experience from a follower’s perspective. By not live tweeting the earnings call, they don’t overwhelm their followers and drive traffic to the webcast. But the greatest value comes from them referring followers to the media’s rolling coverage of the results throughout the day. From start to finish, it’s a well-managed process that is a valuable enhancement to what the company already provides on its website. The one to emulate.

URL: http://twitter.com/ebayinkblog
Followers: 4,638
Apps used: Blog, Seesmic
# of Earnings Tweets: 63
Clicks generated: 169
Comments: The original earnings live-tweeter, eBay continues to be a standard setter. It’s one of the few to incorporate StockTwits into its distribution. Its disclaimer at the start of earnings call live-tweeting sessions, and use of an unique hashtag for each call, are best practices. But too many tweets for my liking, but no one else complains so I’m wrong. Could say more but Richard’s already gotten a lot of ink here. He’s posted a good piece about his set-up and process.

Sure, tweeting financial performance data may be good for these large, blue-chip companies, but the same may not be true for smaller, less visible firms. According to research from the University of Michigan, small and micro-cap companies that participate in greater tweeting “during news event windows is associated with lower bid-ask spreads and greater depths.” Meaning, essentially, a lower stock price. Not good.

Tweeting earnings can have other harsh side-effects. If a company announces earnings news on other sites (such as their corporate website) first, then turns to Twitter (sometimes hours later), it is a slap in the face to the company’s loyal followers. Here are some examples of delayed earnings tweets (courtesy of IR Web Report):

• A gold company listed both in the US and Canada issued a results release at 8:00am ET but only tweeted the news at 6:45pm ET –- a delay of 10 hours and 45 minutes.
• A uniform company released earnings via a PR wire at 4:15pm ET and tweeted the same information 77 minutes later at 5:32pm ET.
• A technology company issued its release at 4:15pm ET and only tweeted it at 4:43pm ET, a 28-minute period during which more than 150,000 shares were traded.
• A health care solutions company released earnings at 4:00pm ET but didn’t mention the results on Twitter until announcing at 4:35pm ET that its conference call had started. Eventually, the results release showed up, but almost 8 hours after the fact at 11:53pm ET.
• A networking company released earnings via a PR wire at 4:05pm ET but tweeted it only at 4:31pm ET – a 26-minute delay during which more than 100,000 shares changed hands.
• A hard disk drive maker that released its results at 4:01pm ET but tweeted them only 24 minutes later at 4:25pm ET – a delay which saw more than 200,000 shares traded.

To investors, these are serious lapses from major corporations’ IR departments. If a company that is active on Twitter cannot manage to update its followers and investors in 140 characters or less on important information in a timely manner, how can it expect to keep such a following?

With more and more companies waking up to the power of social media, more and more sloppiness in the the Twitter and Facebook realm is visible. For companies large and small, to be complacent with such technology is to dig your own grave.