Monthly Archives: September 2010

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The Most Influential People in Corporate Governance

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Each year, the National Association of Corporate Directors (NACD) publishes the Directorship 100 — a “combination of leading corporate directors, corporate governance practitioners and public policy leaders who are recognized as the most influential people in the boardroom and the corporate governance arena.”

The NACD Directorship surveyed 15,000 public company directors and executives to form the final 100 honorees.

“The esteemed boardroom leaders on the Directorship 100 share a common characteristic as proactive agents of change in the boardroom community, shaping the future of corporate governance at a time when American business looks to restore investor confidence and restore economic growth,” said NACD CEO and President Ken Daly.

Among the top 100 honored are a select group of D&O insurers and governance advisors, including:

  • Robert C. Cox, Chubb Group
  • Mark Lamendola, Travelers
  • Timothy J. O’Donnell, ACE USA
  • Daniel W. Riordan, Zurich Financial Services
  • Michael W. Smith, Chartis
  • Richard A. Bennett, The Corporate Library
  • Gavin Anderson, GovernanceMetrics International
  • Steve Harvey, Martha Carter, Carol Bowie, Patrick S. McGurn, ISS Governance Services
  • Robert McCormick, Glass Lewis & Co.

The association noted that it has seen a shift in the type of leader exerting the most influence on corporate governance. For the first time, professionals in the “regulators and rule makers” category received the most nominations.

Top Ten Disasters of the Past Decade

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Zurich has unveiled its list of the “Top Ten Megadisasters” of the past decade. The usual suspects pretty much (listed chronologically — not by their “overall business impact,” which is the basis for the list).

1. 9/11 – 2001
2. SARS – 2003
3. 2003 U.S. / Canada power outage – 2003
4. 2004 Indian Ocean earthquake and tsunami – 2004
5. Hurricanes Katrina, Rita and Wilma – 2005
6. Financial crisis – 2008
7. China earthquake – 2008
8. H1N1 pandemic – 2009
9. Iceland volcano – 2010
10. Floods in Europe and Pakistan – 2010

I have to admit, I would have probably completely forgotten the 2003 blackout if I was playing Family Feud and had to come up with all 10 — and I even wrote a cover story for Risk Management magazine about it.

Obviously, catastrophes that weren’t included like the Haiti earthquake, Cyclone Nargis and Bam earthquake were horrific tragedies, but the insurance penetration in those areas is so minimal that the ghastly human tolls did not have a large affect on the industry.

Let’s all dearly hope that the next decade is tamer.

katrina ninth ward

Ninth Ward. New Orleans. Post-Katrina.

Q&A: Connecticut’s New Data Breach Mandate

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Many states are enacting data breach notification laws, but Connecticut is the first state to have its insurance department get involved, enacting what is known as Bulletin IC-25.

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Wanting to know more about this recent development, I contacted Ed Goodman, chief privacy officer at Identity Theft 911. Below is our exchange:

What is Bulletin IC-25?

EG: On August 18, 2010, the Connecticut Insurance Department issued Bulletin IC-25. Bulletin IC-25 covers the handling of information security incidents that pose a potential risk to an individual’s personal health and/or financial information.

Is Connecticut the first state to issue such requirements for insurance companies doing business in the state?

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EG: While CT already has data breach notification laws, this is the first time any state Insurance Department set out specific stringent breach requirements for insurance companies doing business in its state.

Why is this rule important?

EG: Insurance companies doing business in Connecticut must know how the rule affects them and what they are required to do if they suffer a data breach. Companies with BOP (business owner policies) need to know how the new law affects their business customers, so they can address concerns and meet their customers’ needs.

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While other states (California and Massachusetts) have been on the cutting edge of data breach regulations, Connecticut is the first to establish the insurance department in an active role in data breaches specifically in the insurance industry.

Understanding breach regulations is crucial to every insurance company to:
*       Avoid sanctions or fines
*       Preserve goodwill with people who trust them with their personal data
*       Listening, then advising, educating and advocating protecting and restoring their identities

Do you see other states enacting the same sort of rule in the near future?

EG: Other state insurance departments will follow Connecticut. So all U.S. insurance companies should be prepared and knowledgeable, as well. The State of Connecticut Insurance Department’s Bulletin IC-25 is the beginning of a trend towards high scrutiny security incidents by regulators, especially in the insurance industry. Expect to see more departments following suit in the coming years.

data breach

The Risks of Climate Change

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climate change

Unless we have an unusually cold winter, it’s quite possible that 2010 will go down as the hottest year on record. Through the first eight months, this year has equalled 1998 for that dubious honor.

This in and of is not a harbinger of global warming doom, but it does provide a reminder that the era of climate change is upon us and that society — and business — must prepare now for a future that is “very likely” to include higher temperatures, more erratic weather, greenhouse gas emission restrictions, energy challenges and all the other risks that such realities entail.

In many ways, the insurance industry has been the proverbial canary in the coal mine when it comes to climate change. Some scientists believe that warmer oceans have fueled more powerful hurricanes over the past decade, and back in 2004 (when four hurricanes, Charley, Frances, Ivan and Jeanne, made landfall in Florida) and 2005 (when the “three sisters” Katrina, Rita and Wilma devastated the Gulf Coast) many industry companies began launching initiatives to research and advocate for governmental action to slow carbon dioxide emissions. Allianz partnered with the WWF. Lloyd’s proclaimed in 2006 that society must “adapt or bust.” Munich Re has focused on helping create insurance for adaptation through the Munich Climate Insurance Initiative.

Many other insurers, reinsurers and brokers have launched similar efforts.

For most risk managers, environmental risks have leapfrogged many other threats. In the past, they were mainly under the radar and only relevant in certain industries that may have to deal with Superfund sites or chemicals that the EPA has deemed dangerous.

But now?

They affect virtually every company from retail and manufacturing to financial services and construction. And climate change has been the main driver of this new priority placed on environmental exposures as it has the potential to intensify many other risks (like oil scarcity, something Lloyd’s recently warned could have “expensive and potentially catastrophic consequences” for companies who don’t prepare).

For all these reasons, we will continue to talk about the risks of climate change — especially during the next five days of “Climate Week NYC 2010.” Since we are right here in the Big Apple and this summit will be bringing together so many smart people with so many smart things to say about climate change, we will try to attend some of the events this week and report back what they have to say

Later today, I will be sitting in on a panel Swiss Re is hosting about climate change adaptation that will feature experts from the UN, the World Bank, Oxfam, Swiss Re and the Caribbean Catastrophe Risk Initiative. Tomorrow, Virgin head Sir Richard Branson of Virgin, UN Secretary Ban Ki-moon and Ted Turner will add their thoughts. And on Wednesday, another group of revered thinkers will discuss the risks that climate change poses to low income countries. Altogether, there are at least 20 other interesting presentations planned.

We will try to make it to as many events as possible and let you know what all the fuss is about.

Check back throughout the week.