Though most of these events are organized solely for the purpose of artistic expression or to merely entertain passers by, some flash mobs have become “flash robs” — where groups descend on stores and other venues to, in most cases, steal merchandise. These events can easily injure employees and customers and cause monetary loss through theft and damage to property. And the threat is real. In fact, Marsh recently released Responding to Flash Mob/Rob Events, which, among other things, outlines steps retailers should take before, during and after a flash mob event, such as:

• monitoring of social media websites to identify potential threats
• reviewing business interruption plans and insurance programs with regards to partial or full shutdown of a location
• providing training to employees related to disorderly conduct, assault, theft and looting
• developing internal and external communications plans before an event
• communicating frequently with local law enforcement

With Black Friday just two days away, the threat of flash robs is on the minds of retailers, and if it’s not, it should be. The National Retail Federation has compiled guidelines and protocols of more than 100 retail companies to better understand how to respond.

Now let’s take a look at three videos. The first is an example of a peaceful flash mob, the second is an example of a dangerous flash rob and the third is an analysis of the flash mob epidemic as a spiritual issue.

“The possibility of doing jail time is real from the board room to the warehouse floor,” said Jay Cassidy yesterday at the 2011 RIMS Canada Conference, summing up the new anti-corporate fraud stance taken by U.S. Attorney General Eric Holder in recent years. “It’s not going to be a slap on the wrist. It’s gong to be very personal. And [they] will put you in jail.”

This was the key takeaway from a Monday afternoon panel discussion at the conference, which was focusing on regulatory expansion and led by Cassidy, senior vice president at Marsh Canada. Things have changed and rules created by Dodd-Frank and the Foreign Corrupt Practices Act will have wide-ranging implications — and penalties — for any offending companies.

Another trend is that regulatory agencies are increasingly working together and employing new tools they haven’t used in the past. The SEC and Department of Justice are reaching out to the FBI, for example, for expertise and resources. They have begun wiretapping when it is deemed necessary. In all respects, the regulatory bodies are widening the scope of what they can use to investigate.

One aspect of the reform receiving a lot of coverage is new whistleblower incentives. Now, anyone who reports a company for rule-breaking may be eligible to pocket up to 30% of the sum that officials deem was ill-gotten. Even if the offense is only valued at $1 million, that’s a nice little bonus for the whistleblower. Imagine if it is $1 billion.

Given this, it’s not hard to see why more people might become tipsters for the government. And according to the panelists, the Department of Justice is now expecting to receive upwards of 30,000 tips per year.

This may not lead to more major fraud rulings, however.

“Whisteblowers have always been principles-based more than looking for some sort of monetary pay-off,” said Ashley Beales, vice president at Berkley Professional Liability. ”It’s usually that they just can’t keep quiet anymore.”

The money will likely lead to more tips and perhaps the discovery of more minor violations, he said, but on the highest level, Beales doesn’t expect a new wave of huge violations to start flooding out. At least not to enough of a degree that would significantly alter the D&O market, something that is generally affected by major claims. “Significant fraud always bubbles to the top [regardless of incentives],” he said. “This volume will be more noise than substantive.”

But even if it is merely noise, that doesn’t mean companies are off the hook. “Even if it’s not a legitimate claim and the SEC comes knocking on the door … you don’t tell these people ‘Go away,’” said Laura Markovich, partner at Sedgwick. “They won’t. They’ll come back with a subpoena.”

And just dealing with false claims can run up a big bill quickly. “Lawyers are expensive,” said Cassidy, noting that this is even truer for Wall Street firms. “And New York lawyers are … well … they’re very expensive.”

In regards to increased Foreign Corrupt Practices Act enforcement, the panel said that there will be two major aspects for companies to consider: (1) anti-bribery provisions and (2) the accounting part, which will mandate the need for better internal controls.

The first factor may be especially important for Canadian companies. If they have operations in the United States (or in some cases, even if they don’t) they will be at risk of regulator action. And Cassidy cautioned that this may be difficult to navigate given the fact that Canada is increasingly becoming a resource-based economy. He mentioned that in other locations where this has been the case (Cassidy listed parts of Africa, Russia and Kazakhstan), corruption and bribes have been more typical than, say, in economies in which retail or services drive the economy. “Historically, business has been done a little differently than what we might find acceptable [in Canada],” said Cassidy.

Canada is certainly not Nigeria. The business climate and legal culture would never allow for pervasive bribery and other illegal behavior. So for those in the energy and resources sector, the obvious solution is to remain above board in all operations.

But I do image that many companies will find that, when shipping oil and coal throughout the world, staying true to your ethics — and even within the code of the law — can sometimes be easier said than done.

[Correction: this post originally listed Ashley Beales as working for Canada Berkley. It has been update to reflect the fact that the company is called Berkley Professional Liability. Apologies.]

As a result, according to a new survey from Marsh and the Risk and Insurance Management Society (RIMS), executives in the C-suite are expecting much more from the risk managers at their company.

Below are a few of the key findings from the report:

• An overwhelming majority of respondents said that senior management’s expectations of their organizations’ risk management departments have grown over the past three years. Senior management’s list of desired changes from risk managers includes integrating risk management deeper with operations, executing daily risk management activities more efficiently, providing improved analysis and quantification, and leading enterprise risk management (ERM) activities.

• The most common focus area for 2011 is strengthening strategic risk management, which was cited by more than half of survey respondents. For the second year, this area came out on top, although barriers to doing so remain.

• The top barrier cited to senior leadership understanding of the risk landscape was silos within the organization. This is the same answer given in prior years, and is something that organizations should begin to confront if they have not already done so. One way to tear down the silos is to create or strengthen cross-functional risk committees.

• As the role of chief risk officer (CRO) continues to develop, we are beginning to see some differences in how they view and prioritize the issues. For example, CROs were much more likely than other risk managers to categorize senior management’s change in expectations a “very significant.” CROs said strengthening ERM capabilities and integrating ERM into strategic planning were focus areas for 2011.

• Economic conditions ranked as the number one risk among respondents, and was also the risk that they were least comfortable with their organizations’ ability to manage. In other areas, such as business disruption, risk managers and the C-suite are not as aligned in their views of how prepared their companies are to manage the risk.

• Nearly 60% of companies said their use of data and analytics has changed over the past three years. This is likely a reflection of leadership’s desire for there to be more transparency and quantification around risk decisions, particularly the economic implications. Despite the stated changes, however, there appears to be a need for companies to better use the available tools and analytics.

And let’s take a look at the areas in which senior management’s expectations of the risk management department have grown:

It seems the financial crisis continues to shine a light on the importance of risk management as a whole and, more specifically, enterprise risk management and strategic risk management.

The only thing I’ve talked about more this week is how beautiful Vancouver is.

It’s no wonder considering this dual disaster will likely become the costliest in history. And as the globe rethinks nuclear safety, learns the engineering lessons of strict building codes and ponders the value of just-in-time manufacturing, I got the chance to sit down with FM Global CEO Shivan Subramaniam to discuss all the risk management implications.

We started out talking about the magnitude of both this event and the recent tornadoes that devastated the Southeast United States. On top of their grand scale, Subramaniam was somewhat puzzled by how quickly forecasters churned out their damage estimates.

“I don’t understand how people could come out of the box with some of those estimates that they did because you weren’t even allowed within 20 miles of the [Fukushima Daiichi power plant],” said Subramaniam. “And the transportation systems were not allowing you to go to some of the affected places. And thirdly, the defense forces were preventing you from easily driving in and out of those places. So how do you even make some of those estimates?”

More importantly, the talk turned to the radiation crisis emanating from the Fukishima Daiichi — something it was relieving to hear he believes might not turn out as badly as some have been prognosticating.

“It might turn out to be completely overplayed,” said Subramaniam. “What might actually turn out, which is the camp I’m in, is that people are going to start to recognize that the Japanese preparation and the way they’ve come at this is singularly better than virtually any other democratic country would have reacted to a disaster — especially a radiation disaster.”

Some people have said that Japanese officials seemed slow to act. But Subramaniam thinks that the pre-emptive actions made to keep people out of the potentially-radiation-exposed areas will prove wise with hindsight. “It’s very possible that all of this is just good pre-emptive risk management,” said Subramaniam. “I think that’s what might come out more than anything else.”

In addition the radiation threat, the other longer-term issue he sees continuing to affect businesses and insurance in the area is power interruption. Given the complexity and fine-tuned nature of the Japanese economy, every disruption that occurs going forward could have significant business interruption ramifications. “They have just-in-time manufacturing. They have single source suppliers. Everything is tuned to be very, very efficient,” said Subramaniam. “To now encounter rolling power blackouts, that’s going to be the longer-term issue more so than a lot of the reconstruction efforts. From a business interruption standpoint, that’s going to be the wild card. Everything has been made so tight that even the smallest break just throws everything off.”

As is usually the case with matters of risk, however, where there is downside, there is upside.

In this instance, the silver lining will be most apparent for those companies who managed their risks before the disaster hit. ”When you have a competitive product and you manage your risks properly,” he said, “these kind of disruptions [can] actually give you a competitive advantage because the others aren’t producing as much and you are. And in some cases you might actually end up with pricing power.”

This is something Sony is currently learning first-hand.

In the digital camera market, it has long looked upward at industry giants Canon and Nikon. But due to supply chain disruptions suffered by the two leading digital camera producers, Sony, which is number three in the market, has the chance to make a splash with sales in the near term.

It’s too early to expect the market to completely change, but Subramaniam said he wouldn’t be surprised to see Sony out-pace pre-quake sales expectations for up to the next 24 months. Ten years ago, I’m not sure anyone thought an earthquake in Japan could affect what cameras people were buying in Nebraska.

Brave new world, and all that, I guess.

FM Global CEO Shivan Subramaniam believes some companies that maintained good risk management before the Japanese quake may gain competitive advantages.

It wasn’t just FM Global’s chief who was talking Japan — it was everybody.

I also sat down with Nancy Sher Cohen, a partner at Proskauer Rose who focuses on insurance recovery for policyholder clients. Cohen was moderating a hot topic panel session on the insurance implications the next day, and she had some unique thoughts to share beforehand that piqued my curiosity. Specifically, she wondered whether or not cultural differences in Japan may play into there being fewer claims filed than we might otherwise expect.

“It’s one thing for Japanese companies to make insurance claims in the United States because, in the United States, people make claims — it’s just part of our culture,” said Cohen. “But in Japan, it’s not so clear to me that Japanese big business is going to want to pursue significant claims against Japanese insurers.”

To me, it certainly seems that when it comes to global big business, in 2011, there is now only one culture: money. Ultimately, I would expect capitalist motivations and bottom line prioritization to trump any other concerns. But Cohen wasn’t as certain that that would be the case. “Maybe that’s the way it will come out, but we’re not getting that sense … We’re being told by some of the brokers that they’re not yet seeing big claims being filed.”

She wasn’t saying that cultural factors were the reason but just that it was one of several factors, which also included policy specifics. ”There are lots of exclusions in policies for earthquake or sublimits for earthquakes,” she said. “So, many of our clients are telling us they only have a couple million dollars in coverage for earthquake anyway. Some of them have flood exclusions so the tsunami raises issues about that. The nuclear aspect of it actually is the one where there might be more coverage, believe it or not.”

So perhaps in part because of this, perhaps because people are still recovering rather than doing paper work, perhaps because of the human tragedy element, perhaps in part because business interruption claims can take a long time to figure out, and perhaps in part because of the cultural issues, this is why Cohen and her firm are not seeing quite as many claims in the immediate aftermath of the disaster as they did following 9/11 and Katrina.

And this is why she is asking the cultural question.

“Are there cultural issues there that suggest, maybe, the Japanese are going to be less likely to make these kinds of claims,” said Cohen. “I don’t know the answer myself. But I do know they’re not a naturally litigious society. So those companies may not gravitate towards making those claims.”

Could cultural differences in Japan lead to fewer insurance claims than expected?

At the session Cohen moderated the following day, RIMS President Scott B. Clark led the panel discussion with his story of being in Tokyo when the earthquake struck. Fortunately, he remained unharmed as the ground shook, and the only major fallout for him was the tumultuous decision surrounding when and how to evacuate the affected region. The bullet train to Osaka was temporarily halted, but once service resumed, Clark, along with RIMS Japan Chapter President Yoshi Hamaji, was able to board and get to a safer area. In Osaka, they were even able to carry out their their planned meeting.

From there, he was able to fly out to Honolulu a day earlier than expected, which came as quite a relief to Clark — for obvious reasons but also because he felt as though his presence was a nuisance to Yoshi, who in Clark’s view should have been focusing on his family and personal concerns, not the logistical issues of helping a colleague get out of the country.

After the story the panel got down to the insurance nitty gritty, mostly focusing on the business interruption aspects. One simple question from Cohen helped explain exactly why the resulting BI claims are so difficult to gauge. “We know when [business interruption] begins: when the physical damage starts. But when does the business interruption end?”

Does it end when the company turns the lights back on and restarts production? Or, as panelist Duncan Ellis of Marsh noted, is it truly “covering losses of profits you would have made.” The second view is a more nuanced, long-term outlook that weighs in factors like resulting supply chain limitations and doesn’t end until the company can resume operations in a way that gets it back to prior revenue levels. That can take a long time.

The answer may more often be the former than the latter, but the policy language — as always — will be the determining factor. Cohen said she worked with one company, for example, that had a business interruption policy that, due to odd language, didn’t even trigger when the event happened. This highlights something Ellis said: property damage claims are relatively easy, business interruption can be a pain.

Examining policy language becomes critical, then, for risk managers. Sub-limits remain a concern. If you have low sub-limits and are struck by a major earthquake, is $2 million really going to help?

And what if the trigger is something particularly strange? Remember when the Icelandic volcano Eyjafjallajökull erupted last year? For most, the resulting business interruption was not coverable. As far as the policies were concerned, this was a “non-incident event,” as Ellis termed it. Without a defined incident, it’s like the BI never happened. Except that it did.

But if you purchase a policy that provides coverage for everything but those events specifically excluded, said Cohen, you will have a much easier time getting your claims paid. Cohen called this an “everything but” approach and recommended risk managers negotiate for such language.

Really, these are just a few of the more notable discussions I had or heard about Japan.

There were plenty more that I will try to post when I return to New York.

And honestly, I wouldn’t be surprised to find myself talking about the catastrophe just as much next year. Unfortunately at RIMS 2012, however, I won’t also be able to off-set those depressing conversations about disasters with chats about how beautiful Vancouver is.

While I think most would agree that diversity of all types is improving not just in risk and insurance, but in most all industries, the corporate world by and large remains the domain of white, heterosexual males. Don’t get me wrong, there are obviously countless others of different backgrounds who are thriving in all sectors, but the mold of the typical power exec has not really changed since the days of Mad Men.

That’s why all signs of progress are encouraging.

And for the insurance industry, the 2011 Corporate Equality Index from the Human Rights Campaign (HRC) is a great sign that the industry really is advancing in terms of encouraging diversity in its workforce. A full 18 companies in the industry, including power brokers Aon and Marsh & McLennan scored a perfect 100% as a Best Place to Work for their “support equality for lesbian, gay, bisexual and transgender employees,” according to HRC. (via PropertyCasualty360.com)

Kudos to all those on the list.

True, businesses need to make money to stay afloat in the competitive business world. But in this modern marketplace, companies are increasingly focusing on remaining profitable while incorporating sustainability. With evidence that business activities are influencing climate change and companies are depleting the earth’s resources at an alarming rate, environmental risks have become business risks.

Marsh recently released a white paper entitled, “Sustainability – Managing Your Risk” that addresses the risks companies face in trying to manage one of the newest business risks. First, the report stresses companies to look for tangible evidence that their own suppliers have signed up to a sustainability code, saying that not only should your company become sustainable, but your company’s supply chain as well.

With legislation passing, companies are realizing their operations may not be considered environmentally friendly. As an example, the European Union enacted the Environmental Liability Directive, meaning that businesses must now ensure that they do not cause damage to water, land or biodiversity.

But many companies believe “going green” is more costly. Though that may be true in the near-term for some instances, the long-term return is proof that green is good.

“There is evidence that changing business practices to a more sustainable model can reap financial rewards. The Fairtrade movement is an example where consumers are willing to pay higher prices to be reassured about how the products have been produced.”

Among the sustainability issues for businesses and society is water (we ran an in-depth feature on this topic in the June 2009 issue). Water-intensive companies (think Coca-Cola, Nestle, Texas Instruments) are now assessing the risk they pose to the areas in which they operate. In fact, the Carbon Disclosure Project is now asking the world’s biggest companies for the first time to disclose how much water they use. And this is no tree-hugging initiative — major investors “with trillions of dollars in assets have backed this call for such information.”

In today’s business world, people’s view of a company is not based simply on what it does, but how the company does it. As Marsh says:

“With the increasing pressure on depleted natural resources and a greater level of scrutiny concerning environmental performance from policymakers and investors, it makes more sense than ever to fully understand the impact that a business is having on the environment and to make changes to business process that are seen to be having a deleterious effect on the environment and society.”

Lagging behind on the issue of sustainability within business operations will eventually mean lagging behind the competition.

The global shockwaves following Lehman Brothers’ collapse have woken India Inc to the importance of sound risk management system to tide over future crises. Despite the fact the India was less affected by the meltdown, companies here are pulling up their socks as the slump has demonstrated that risks are entwined and cut across boundaries.

It’s a brief article without many specific examples, but it touches on the fact that risk management in something that many companies now expect from all their units — and they expect them to report their findings to the CFO. All this looks like many businesses in the country are beginning to see that there are real benefits to holistic risk management.

Much like their U.S. and European counterparts, Indian companies will undoubtedly struggle to turn this good idea into good practice, but the underlying concepts have to come first, and this looks like a positive sign in that a key driver of the developing world economy is moving towards incorporating better forethought throughout its private sector.

Most big players have sought international risk advisory firms like Marsh, to step up the internal control process of their portfolio companies. “The global credit crisis has driven home the point that although US was the epicentre, its effect has been felt elsewhere too, in today’s inter-connected world. Risk management must factor inter-linkages and remote possibilities,” said Marsh India head Sanjay Kedia. “Low-probability and high-severity catastrophes like the recent financial turmoil or the Mumbai terror attacks do happen,” he said.

And when they do, hopefully many companies in India will be able deflect the blow.

Bangalore, or The Silicon Valley of India, has seen large-scale economic expansion in recent years. Now, a focus in risk management is expanding there as well.

As with any report of this kind, there is a temptation to dismiss the findings as far-fetched and unlikely — the kind of thing best left to the Chicken Littles of the world who want to live in fear that the sky is falling. But what if the sky does fall? What do you do then? As John Merkovsky, managing director of Marsh Risk Consulting, said during Marsh’s analysis of the report this morning, “It doesn’t matter if you’re out of business for reason A, B, C or D. You’re still out of business.” 

Risk is increasingly interconnected and any risk manger can visualize a scenario where a global concern can quickly become a personal concern. Now is not the time for what the World Economic Forum calls “risk myopia.” The impacts are too great. After all, if the extremes on the bell curve can kill you, it would be crazy not to pay attention.

Below is a video from a World Economic Forum panel discussion on the survey’s results from January.