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Are Critical Infrastructure Issues Finally Being Addressed?

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The recent collapse of an Interstate 75 overpass in Cincinnati, killing a worker and injuring a truck driver, is yet another reminder of the plight of America’s infrastructure, which is estimated to require billions of dollars to bring up to 2015 standards.

The bridge that collapsed had been replaced and was being torn down as part of an extended project to increase capacity on a congested, accident-prone section of the interstate, according to the Associated Press.

President Obama, speaking today in Saint Paul, Minnesota, outlined several proposals, including launching a competition for $600 million in competitive transportation funding and investing in America’s infrastructure with a $302 billion, four-year surface transportation reauthorization proposal, according to a press release from the White House. Obama also plans to “put more Americans back to work repairing and modernizing our roads, bridges, railways, and transit systems, and will also work with Congress to act to ensure critical transportation programs continue to be funded and do not expire later this year.”

More and more, states are finding ways to fund infrastructure repair. New York Gov. Andrew Cuomo, for example, in his State of the State address, proposed $3 billion in loans and grants for infrastructure upgrades, including $1.3 billion for the Thruway and the new Tappan Zee Bridge, which is under construction. The money, he said, would come from a a $5.4 billion windfall from bank settlements.

A report by the American Society of Civil Engineers (ASCE), “Failure to Act: The Impact of Current Infrastructure Investment on American’s Economic Future,” found that the cascading impact of putting off repairs affects the entire economy. The report concluded that, between 2013 and 2020, there will be an investment gap of about $846 billion in surface transportation.

At risk are a number of bridges and overpasses. According to Risk Management magazine:

“Right now, 11% of our bridges across the country are rated structurally deficient and another 13% are considered functionally obsolete,” Andrew W. Herrmann, 2012 president of the American Society of Civil Engineers (ASCE) and principal with Hardesty & Hanover LLP, an infrastructure engineering firm. “This means they were designed to an older standard, so they may not have the same lane widths or turning radius or may have been designed to carry lesser loads.”

Deterioration of the nation’s infrastructure jeopardizes public safety, threatens quality of life, and drains the U.S. economy. “If they have to start closing down, restricting or putting mileage postings on bridges, the economy will be affected,” said Herrmann, who served on the advisory council for the 2003, 2005 and 2013 report cards and chaired the council for the 2009 edition.

“Bridges are the most pressing need in the infrastructure overall. You can have all the roads and highways you want, but if you don’t have the bridges to cross the rivers and intersections, it slows everything down.”

He observed that, from a bridge engineer’s perspective, investments need to be made to keep bridges in good repair. The Federal Highway Administration (FHWA) estimates that it needs $20.5 billion annually to eliminate the nation’s backlog of bridge repairs by 2028, but only $12.8 billion has been budgeted. The challenge, then, for federal, state and local governments is to increase investments in bridges by $8 billion annually.

Enterprise Hot Spots for 2014

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If everyone had a crystal ball, risk management would be easy. But since there aren’t any wizards or fortune tellers among us (that I know of), we have to rely on forecasts to help guide us. To this end, every year, business consultant CEB develops a list of what they consider the top 10 emerging risk areas that will affect enterprises in the coming year. While the list is primarily intended to help audit teams develop and refine their plans for the coming year, the risks are really applicable to any business unit.

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  1. Compliance management
  2. Cybersecuirty: Malicious insiders
  3. Risk management
  4. Cybersecurity: Malicious outsiders
  5. Emerging markets
  6. IT governance
  7. Third-party relationships
  8. Project management
  9. Intellectual property
  10. Crisis response management

In a new online exclusive article in Risk Management magazine, Friso Van Der Oord and Jeffery Ugbah, directors with CEB’s legal, risk and compliance practice, organize the list into four themes that look at the downside of business interdependence, the balance between control and value, embedding compliance in the business, and organizational blindspots. Their analysis helps put these risk into greater context.

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Our current report addresses some well-known risks, such as cyber-security and third parties, but also highlights gaps in companies’ control environment such as inadequate risk management and insufficient crisis response management that may create real blind spots for companies.
Not only do we see changes in the corporate risk landscape, perhaps more importantly we see organizations, despite their best intentions, struggle to maintain effective controls in light of rapid business and regulatory changes.

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For more, you can read the entire article at RMmagazine.com.

Online Exclusive: How to Protect Yourself on Social Media

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Add Friend on Social Media

In the October issue of Risk Management, social media and eDiscovery expert Adam Cohen chatted with me about the biggest corporate risks in sites like Facebook and Twitter, and outlined some best practices for developing and enforcing a social media policy. But behind every account sits one major risk that’s hard to control: a person.

Not all of Cohen’s advice could make the magazine, so here are some of his extra tips for how to mitigate the risks of personal social media – both to protect your company and to protect yourself.

What should employees know about their personal social media accounts?

All employees need to recognize one thing: they shouldn’t have any expectation of privacy in information that they post on social media. Even if they think they’re limiting information to a select group of friends, this stuff can all be disclosed in litigation and there are many cases where courts have required so-called non-public social media information to be disclosed. It’s fairly routine at this point.

Many employers – certainly all the major companies – have specific social media policies that give very particular and clear direction to employees on what they can and can’t do when it comes to company information on social media. That extends beyond just corporate social media and includes anything they’re doing on social media that could impact the company. And many employers are going to take the position that they have the right to monitor employees’ social media.

How can employees protect themselves?

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One of the key things employees need to do to protect themselves is only disclose information they would be comfortable disclosing to the entire world and they should not to go anywhere near business information. Being safe on this front may include publishing a disclaimer that an individual is not representing the views of the company. What else can they do? Follow the employer’s social media policy to the letter and, any time they have a question about whether one of their social media posts may be affected by the policy, they should ask. Most policies will provide a resource for questions, whether it’s a general counsel or a compliance officer or immediate supervisor.

Those are probably the main things: not having an expectation of privacy on social media and treating everything you post like it’s private, and following the policy to the letter and getting clarity and permission on anything that you think could be a violation of the policy.

As we’ve used social media more, do you think employees are using social media any more wisely?

I think it’s still too early to say that there are any improvements there. Litigation that involves social media as a factor in one form or another is just exploding. There is no information that would suggest in any way that employees have increasing awareness of this and are taking that into account when they go on social media.

What is the first thing you look for when trying to evaluate a social media account for potential liability or wrongdoing by an employee?

The first thing I would look for is the nexus between the social media and business information. Personal social media may be a concern from the perspective of the employee being seen as representing the company, even if it’s just sullying the reputation of the company – and that’s especially true the higher-ranking the employee is – but the first thing to look for is whether the employee discussing matters within the scope of their employment. And that’s difficult to monitor – the social media world is a big world, especially for a company with a lot of employees.

So then general personal misuse is relatively benign to you?

The other stuff is not benign at all. An employee who behaves in an inappropriate way on social media or is violating intellectual property rights, copyright or trademark of some other company – or, say, badmouthing a competitor – well, that’s not benign. If they’re engaged in criminal activity on social media or they’re defaming someone, that’s certainly not benign because they work for a company and that can impact the image of the company or lead to serious repercussions. That only gets more serious if you’re a prominent or higher-ranking executive.

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Is it benign? No, but you can’t control that.

Although, I should note, the National Labor Relations Board has said that employees have to be permitted to discuss their working conditions with other employees and that the employer can’t really control that, and if the social media policy purports to prohibit that discussion, the policy is not valid.

What is the most useful evidence in building a case against an employee?

Well, it depends on the kind of case, but social media has now been used as evidence in hundreds of cases. The most devastating use of it so far has probably been in the personal injury arena.

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Plaintiffs have made claims of disability and emotional distress and the defendant has been able to obtain discovery or has retrieved public social media that completely contradicts those claims – for example, a video of the complainant surfing. There are a lot of cases like that and that’s just an example of really devastating use of social media.

Who do you friend at work?

Well, you don’t friend subordinates – that’s a no-no. You can get yourself into all kinds of trouble there with people making claims about what kind of a relationship you have with them. You don’t friend people at work whom you don’t know – just as you don’t in your personal life. You shouldn’t assume that, just because this person works with you, they’re the kind of person with whom you want to be associated. You also don’t want to friend somebody who you don’t want to have access to your social media. If you have privacy concerns, you want to maintain the upper limits of your reasonable expectation of privacy, so don’t friend people you’re afraid might use that access against you in an invasion of privacy.

Risk Management Staff Picks: Top 5 Books of 2012

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In each issue of Risk Management, we publish book reviews from the staff. Some books are easily forgettable, while others make us stop and think. They inspire us, teach us and may even end up on our bookshelves at home. The following are our picks for best business books of 2012:

The Wide Lens
When it comes to innovation, common sense dictates that if you develop a great product it will be successful. But history is littered with great products that never quite made it, from electric cars to inhalable insulin to any e-reader that came out before the Kindle. So why do some great innovations succeed while others fail? According to author Ron Adner in his book The Wide Lens, the reason doesn’t lie with the innovation itself. Instead, many companies overlook two important risks while taking an innovation from concept to reality, and these blind spots can doom the product before it even gets out of the gate.

 

Street Freak
Expensive scotch, $3,000 dinners, 80-hour workweeks, million-dollar trades, million-dollar paychecks and acute psychosis. It’s the life of a big bank trader. Or, at least it was for Jared Dillian, a Lehman Brothers index arbitrage trader from 2001 to 2008. In his energized memoir, Street Freak, Dillian recounts his days at what used to be one of the largest banks in the world, from his time as an associate assigned to work security when Lehman relocated to Jersey City after 9/11 to his rise to the firm’s head exchange-traded fund trader. In between were massive highs and lows, and a realization that Dillian was afflicted with bipolar and obsessive-compulsive disorders, conditions that almost cost him his life.

 

Learning from the Octopus
Since 9/11, the concept of national security has changed. The United States has not been attacked by terrorists since that day, so something must be working, but the general approach has been fundamentally flawed, according University of Arizona marine ecologist Rafe Sagarin in his new book Learning from the Octopus. To Sagarin, the general mentality to fight a “war on terrorism” — a war with a broad, reactionary strategy that can never be won—is misguided. “Fish don’t try to turn sharks into vegetarians,” writes Sagarin. “Living immersed in a world of constant risk forces the fish to develop multiple ways to live with risk, rather than try to eliminate it.”

 

Consent of the Networked
Many social uprisings in emerging countries have gained momentum via the internet. From the first, in Tunisia in 2002, to the 2011 ouster of Egyptian dictator Hosni Mubarak, an internet revolution has provided a platform for those without a voice. The power of the web to change history and turn political strife to personal freedom is documented with great detail in Consent of the Networked. But the internet’s power can also spread evil. Author Rebecca MacKinnon, a journalist and former CNN bureau chief in Beijing and Tokyo, uses China as one example. In possibly the best chapter in the book, the author details how Chinese internet crusaders are using the web to fight against, among other things, injustice within the legal system. “The internet enables ordinary Chinese people to speak truth to power and pursue justice in unprecedented ways,” writes MacKinnon. “At the same time, Chinese internet users have a manipulated and distorted view of their own country as well as the broader world.”

 

Into the Storm
The Sydney to Hobart Yacht Race is considered one of the most prestigious and difficult open water races in the world. Covering 628 nautical miles from Sydney, Australia, to Hobart, Tasmania, the race is known for challenging ocean conditions, blustery winds and frigid temperatures that can test even the most experienced sailors. Into the Storm tells the gripping story of how one of the smaller boats in the competition, the AFR Midnight Rambler, not only survived the race, but went on to win the prized Tattersall’s Cup, which is awarded to the winner. In the process, author Dennis Perkins, who also recounted Ernest Shackleton’s Antarctic expedition in Leading at the Edge, shares interesting lessons about the power of teamwork under the most extreme conditions.