Category Archives: Risk Management

Winter Weather Third-Largest Cause of Cat Losses

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Winter Snow Storm

Weather damage never goes out of season. According to a new report from the Insurance Information Institute (I.I.I.), winter storms are historically the third-largest cause of catastrophe losses, behind only hurricanes and tornadoes.

“Winter storms accounted for 7.

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1 percent of all insured catastrophe losses between 1993 and 2012, placing it third behind hurricanes and tropical storms (40 percent) and tornadoes (36 percent) as the costliest natural disasters,” said I.I.I. President Robert Hartwig.

Insured Catastrophe Losses

Between 1993 and 2012, winter storms resulted in about $27.8 billion in insured losses—or $1.4 billion per year, on average, according to Property Claims Service for Verisk Insurance Solutions.

A December ice storm in North Texas left at least $30 million in residential insured losses in its wake, the Insurance Council of Texas reported. This figure does not include estimated damage to vehicles or government property, nor does it take into account the significant municipal expense of safety or cleanup measures. Dallas County alone spent 0,000 to 0,000 just to battle slick roads, according to conservative estimates from County Judge Clay Jenkins.

He told Insurance Journal that, while sanding and salting roads constituted some of the county’s greatest efforts, the biggest cost came from closing offices, including the court system. Weather-related shutdown resulted in lost productivity of about .

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5 million, he said.

Nation-wide, December weather caused total economic and insured losses estimated in the hundreds of millions of dollars and claimed 29 lives, Aon Benfield reported.

But 2013 should have made some fair-weather friends in the insurance industry. Last year, according to Munich Re, direct overall losses caused by global disasters amounted to around $125 billion and insured losses of around $31 billion. While exceptionally costly, these were below the 10-year averages of $184 billion and $56 billion, respectively.

Plan Ahead for Holiday Party Risks

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Holiday office parties are a good opportunity to bring employees together, but they present potential risks for organizations. With social media added to the mix, even slight misconducts can be amplified if they go viral. What might have been an embarrassment handled quietly by a company can quickly become a reputation issue.

According to an article by Lloyd’s, the addition of social media “can seriously impair a company’s ability to manage a crisis,” said Eric Alter, Risk Consultant at Marsh Ltd.

“Social media and business entertainment can be a challenging mix—whether it is a sales conference, awards dinner or a Christmas party—the use of social media in the work environment has to be carefully considered,” he said, adding that websites like Twitter, Facebook and Instagram enable almost instant sharing of information, but even email can cause problems. An employee intending to send a funny email to a coworker, for example, could accidentally send it to clients.

Steve Adcock, Underwriting Manager at QBE Europe observed that alcohol can lead to a heightened risk of inappropriate comments, behavior or even assault. “People can lose their inhibitions and may not think about what they say or do,” he said. “Employees will not always get along at the Christmas party. Disagreements can lead to hurt feelings through to a potential assault.”

Paul Griffin, Head of Employment and Labor at international law firm, Norton Fulbright cautioned that an employer is liable for the wrong doings or injuries of their employees, unless they can show they have taken all reasonable steps to prevent them.

To protect themselves and their employees, organizations need to advise staff attending a party that the usual company rules still apply, Alter advised. “A company policy should make it clear that any event that is associated with work should be treated as work, and that the social media policy continues to apply.”

OneBeacon Professional Insurance noted in “A Guide to Minimizing Risk at Company Holiday Parties,” that because of the infrequency of company-sponsored holiday events, liability risks are often overlooked. Concerns such as liquor consumption, premises safety and security, discrimination and food borne illness are just a few of the issues that need to be addressed to help prevent injuries or even harassment.

According to the report, any accidents or injuries occurring at company events may be considered work-related and could possibly be subject to workers compensation.

To help avoid safety mishaps OneBeacon advises:

• When using a venue away from the office, inspect it to ensure it meets safety standards. Note exits, emergency lighting and whether there is flooring to prevent slips and falls, particularly if there is a chance of bad weather.

• Consider the effects that weather may have on safe travel to and from the party. Special considerations may be needed to keep sidewalks and parking lots clear if the event is outside of normal business hours.

• Think about potential security needs, especially if the event is in an unfamiliar neighborhood or of the venue is closed to the general public.

• Keep an eye on party-goers to ensure that no one wanders off or goes to a car or parking garage alone after dark.

• Have an emergency plan in place in case someone is injured or needs medical assistance. Find out the location of the closest hospital and whether anyone can perform CPR or use a defibrillator.

• Review situations for employees with disabilities who may require special attention. For example, if a disabled employee must use a wheelchair, check that there is a safe entrance, navigate the event and know how to deal with a possible emergency.

Target Sees Massive Customer Data Hack

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It couldn’t have happened at a worse time for a retailer. Target informed shoppers that if they charged an item at Target stores between Nov. 27 and Dec. 15, their credit and debit card accounts may have been compromised—as much as 40 million cards in all.

While online shoppers typically have been the victims, this time hackers went through the physical checkout systems inside every Target store—about 2,000 stores, 1,797 in the United States and 124 in Canada. It’s possible that every shopper who swiped a credit card or entered a pin number at the point of sale had their information stolen.

Barbara Endicott-Popovsky, director of the Center for Information Assurance and Cybersecurity at the University of Washington told TIME Magazine that hacking “is a business. The general public would be shocked and amazed by the size of the problem.”

She added, “People who run companies are not aware that they’ve actually become software companies. We’re headed toward the internet of things, where we have embedded software in every product. What we’ve done is open up a whole host of vulnerabilities.”

In the past, criminals wishing to steal credit card numbers and PIN codes had to do so by placing a thin pad over an ATM key pad. Through this they had to capture both the credit card number as it was swiped as well as the PIN typed into the keypad, according to Business Insider. With this information they could create fake cards from blank cards with magnetic strips that can be used in ATMs. These hackers also must have a presence at the ATM to install the pad and later to remove it to retrieve the numbers Business Insider said. Because they could only get information from a few hundred cards a day, one machine at a time, hackers using this method have been limited.

Time reported that in a case such as this, strategies used to infiltrate a point-of-sale system can be similar to those used on other pieces of software. A piece of malware called Dexter, used to infiltrate point-of-sale programs, may have infected Target’s network. It is also thought to have been responsible for widespread credit card theft at fast food restaurants in South Africa this year.

To introduce Dexter to Target’s system, an employee could have purposefully left a backdoor open for hackers, Time said, or could have clicked a link unknowingly, allowing an entry point for the malware or other malicious code. It’s also possible the company’s wireless network was compromised.

Information reported stolen from Target customers includes names, credit or debit card numbers, card expiration dates and the three-digit security code, known as the CVV on the back of cards, USA Today reported. Target spokesman Eric Hausman, however, confirmed there is “no indication that debit card PINs were impacted.” Access to PIN numbers would allow the thieves to use stolen account data to withdraw cash from ATMs.

Time surmised that because of the scope and the timing of the Target theft—during the busiest shopping season—the hack was most likely done by organized cybercriminals. They would have had to plan for it well in advance and probably will sell the data for a few dollars per card. CNN said today that there is evidence the stolen information is already being sold and that the hackers most likely came from abroad where there is almost no penalty or access to the criminals by the FBI.

Andy Obuchowski, a director for security and privacy at consulting company McGladrey told USA Today that Target’s breach is the latest in a growing problem for retailers. The issue has increased as more companies outsource writing and maintaining software, he said.

In 2007, hackers accessed TJ Maxx’s central database and stole account information for more than 45 million credit cards by intercepting data as it traveled between hand-held price scanners and cash registers. Data breaches in recent years have also included Michael’s, Stop & Shop, Barnes and Noble, Aldi and Subway.

“This sort of hacking is absolutely on the rise, as the tools are more readily available for even novice hackers to utilize in their efforts to crack open companies’ computer systems,” Adam Levin, chairman of Identity Theft 911 and Credit.com told USA Today. “With a data breach of this type, the rewards — your money — are so great that it can only continue to increase.”

Target said in a statement that it alerted authorities and financial institutions immediately after it was made aware of the unauthorized access. As well as putting the appropriate resources behind these efforts, the retailer said it is partnering with a leading third-party forensics firm to conduct a thorough investigation.

Train Disaster Calls for Safety Action

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Photo: eddtoro/Shutterstock.com

At 7:20 a.m., Dec. 1, four people died and more than 68 were injured, 11 critically, when a speeding passenger train headed for Grand Central Terminal derailed on a steep curve.

Brake failure was cited as a possible reason for the crash, but inspections determined that the brakes were in good condition. The train’s operator, who recently had been switched to an early shift, later said he may have dozed off, failing to apply the brakes in time to avoid the crash.

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The derailment is of special interest to me. The Hudson line is the one I take to work every day and is the same line that suspended service in July when 10 CSX garbage cars derailed near the same location, just north of the Spuyten Duyvil train station.

This week the Federal Railroad Administration cited the MTA’s safety record as “unacceptable.” The agency noted a series of other recent major accidents on the commuter railway: a two-train derailment May 17 in Bridgeport, Conn., where more than 70 people were injured, the death of a track worker in West Haven, Conn., who was struck by a commuter train, and the CSX train derailment, according to DNAinfo New York.

The Associated Press said that injuries from train accidents on Metro-North are higher this year than any of the past 10 years, with 123 people injured in train accidents through August. A 2012 report by the Government Accountability Office found human error to be the cause of almost one-third of train accidents from 2000 to 2009.

The question being asked is why a safety measure—an automated system that would stop a train that is out of control—was not in place, even though “positive train control” has been called for by the national safety board. In response to several fatal accidents and to combat human error, The Rail Safety Improvement Act of 2008 mandates that positive train control for passenger and freight trains be operational by Jan. 1, 2015. Because of the costs to install the technology, estimated between $6 billion and $22 billion, however, Congress is considering an extension of the deadline until late 2018.

The GAO report described positive train control as a system designed to prevent accidents caused by human factors, including train-to-train collisions and derailments that result from trains exceeding safe speeds. It is also designed to prevent incursions into work zones and movement of trains through switches left in the wrong position.

While its safety record leaves much to be desired, the MTA was fast to resurrect its contingency plans. On Monday, thousands of commuters were transported by bus from the Yonkers train station to a Manhattan-bound subway. I made the trip, which was seamless but understandably slow-going. It took me two-and-a-half hours to get to work.

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A standout were the first responders. They were fast to arrive on the scene, rescuing people from damaged cars and getting them to area hospitals. Responders and spokespeople were articulate, and did not speculate as to the cause of the crash. They were impressive.

As of yesterday service on the Hudson Line is fully restored.

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This is an amazing feat considering that the train cars had to be removed by cranes from a tight section of track flanked by the Hudson River and a steep rock embankment, all during an intense investigation. Sections of damaged track also had to be rebuilt.

Yesterday’s train ride was thankfully uneventful and today’s even more so, but there was a sad reminder of the disaster on both days, when the train came to a crawl as it approached the deadly curve at Spuyten Duyvil. Another reminder was several pieces of heavy equipment used for cleanup, still sitting near the tracks.