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October Issue of Risk Management Now Online

The October issue of Risk Management magazine is now online. The cover story, “Immovable Objects,” focuses on how complacent boards of directors fear change, often retaining CEOs past the expiration date of their effectiveness. We also cover food safety in a feature by John Turner, North America product recall manager at XL Insurance. And, as is tradition with our October issue, we highlight cyberrisk, this time in a four-part feature covering cyberattacks and critical infrastructure, the military and its vulnerability to hacking, the cost of protection and a guide to selecting cyber insurance.

Our columns explore topics such as:

If you enjoy what you seen online, you can subscribe to the print edition to enjoy even more content.

Please let us know what you think in the comments below. And stay tuned to the blog for even more coverage in the future. Lastly, you can follow the magazine on Twitter“like” us on Facebook and join our LinkedIn group.

7 Ways to Manage Vacant Building Risks

Recessionary pressures are in full force again, and another wave of layoffs does not bode well for the commercial real estate market. Vacancies in office buildings and warehouses rise as businesses close their doors, and property management companies have a lot on their plate as they simply try to maintain non-producing properties. A recent example of the risks clarifies the issue.

A Missed Sale in a Sluggish Economy

An office building in Texas that had been empty since the precipitating events of the recession had an asking price of $1.1 million in 2011. After a long period of dormancy, a local prospective buyer came knocking, stating he was interested in obtaining the property by January 2012 for a move-in of his growing business.

After some negotiation, a price of $850,000 was settled upon. The prospective buyer secured a banker and began a budget bidding process with general contractors. The more contractors who were invited to participate, the greater the variance was in the construction costs. The banker and the prospective buyer collaborated and offered the management company a much lesser sum of money. The owner’s price was lowered to $650,000 because of the added construction costs. So, what was the problem?

Vandals had removed all the copper from the large HVAC units on the roof, requiring an unanticipated, six-figure sum of money.

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Additionally, there were 350 fluorescent light fixtures that had been destroyed and the electrical service panels in the building had been scavenged for copper.

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Broken glass was scattered throughout the building and the restrooms were caked with mold.

The more the potential buyer looked into costs of construction, the less attractive the 40% reduction in the asking price became. The seller not only lost the sale, he also suffered the continuous financial drain on his investment property. It has become a money pit.

Mitigating Losses With Tighter Security

What could have limited the exposure of this property to vandalism and the severity of the loss? With the exception of the mold, most of the nonredeemable casualties of the building could have been prevented by a security system which included intrusion detection, monitoring, and video surveillance.

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Not only do these systems offer a forensic record, they also offer a beneficial deterrent factor.

An investment of no more than $25,000, possibly much less, could have saved the property management company an easy $300,000 in losses. Additionally, the negative drain on the future value of this latent money could easily grow to a loss of $1 million dollars or more. The property might sit for another four years without a suitor.

Seven Security Components to Manage Risk

Security considerations should include the following:

  1. Perimeter electronic detection of rooftops and outbuildings containing the mechanical equipment
  2. Interior motion detection systems
  3. Glass break monitoring devices
  4. Prominent video surveillance cameras
  5. 24/7 monitoring services to interface with local law enforcement authorities and building owners
  6. Controlled lighting (interior and exterior) monitored by a nighttime security company
  7. Quarterly fire alarm inspections

This is not an exhaustive list. Property owners will have to decide what makes the most sense in terms of risk management. The cost of doing nothing, or too little, however, can be devastating.

 

September Issue of Risk Management Now Online

Faithful readers: the June issue of Risk Management magazine is now online. The cover story focuses on the four risks facing energy companies today and how often-overlooked areas such as commodity markets and compliance pose serious threats. Other features explore the six errors in judgement people are prone to when appraising risk and Risk Management‘s 4th annual risk management and insurance education review.

Our columns explore topics such as:

If you enjoy what you seen online, you can subscribe to the print edition to enjoy even more content.

Please let us know what you think in the comments below. And stay tuned to the blog for even more coverage in the future. Lastly, you can follow the magazine on Twitter“like” us on Facebook and join our LinkedIn group.

Guest Post: Global Protests and Business Travelers

Lately, it seems as if almost every week there is a protest of some kind at some point in the world. From hundreds demonstrating against nuclear power in Madrid to protests and travel disruptions in Delhi to the deadly anti-government coup in Cairo, there is almost no corner of the world that is immune from these mass scenes of chaos, anger and extreme violence.

These protests are particularly dangerous to unsuspecting business travelers from the United States, who find themselves caught in the middle of such unrest. Business travelers going overseas, particularly to developing nations where there may be anger and resentment toward Americans, need to be knowledgeable and prepared in advance of any trip.

As a security or risk manager, you need to arm your employees with vital information and urge them to be cautious at all times. Here are some tips that you can offer employees, wherever their jobs, projects or assignments may take them:

PLAN AHEAD; ANTICIPATE A PROTEST
Prior to departure, research current news about the destination location for controversial events such as a political race or impending decision on a high-profile court case. These events are often the springboard for a protest or riot, especially in developing nations undergoing a great deal of change.

For instance, recent events include a protest that led to travel disruptions in Delhi, India, with police firing tear gas on the crowd or a protest that also became violent in Manama, Bahrain. However, no area is off-limits. One recent example was a protest outside the Libyan Embassy in Ottawa, Canada, where two were injured. Almost any kind of protest can happen anywhere and turn violent and dangerous almost instantly.

The timing and location of public protests tend to be known in advance. If travelers do their homework prior to departure, they can avoid the area or neighborhood where the protest is happening. For instance, if the hotel they plan to stay in is located within a few blocks of the protest, they can cancel that reservation and opt to stay at a hotel further away from the event.  Also, if they have business meetings at restaurants or offices around the protest area, they should consider moving the meeting to another part of the city.

If a protest is being planned, travelers should understand the nature of the riot and the attitude toward Americans so they can assess the situation’s real danger. A teachers’ protest in Wisconsin is not the same as a riot in a Third World nation that is hostile to Americans. If travelers look through the U.S. Department of State’s website (www.state.gov), they can obtain more details on particular governments and regions of the world prior to their trips.

ADOPT A “LAY LOW” MENTALITY
If an unexpected riot erupts overseas, travelers need to go into stealth mode. They should find a safe haven in the area, such as a restaurant or hotel and remain as far away from the main entrance as possible.

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The main entrances are most likely to be hit by bombs, bullets, or other weapons if the situation turns violent. They need to take off glasses, hats or anything else that identifies them in any way. Even though they may have expensive phones or cameras with them, those items need to be either hidden or simply discarded. Photographs of riots could be confiscated and used against innocent bystanders.

Travelers should remain neutral and avoid sharing their opinion of the situation.

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If a rioter begins talking to them and seeks their opinion, they should simply say they are unfamiliar with the issue. They don’t want to appear indifferent or uncaring, as that may elicit a violent response against them from an already agitated rioter.

If possible, travelers should go back to their hotels and simply remain in their rooms as much as possible during a protest.

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They should contact their corporate travel assistance provider as soon as possible, to assist them in a safe removal from the situation.

STAY AWAY FROM PUBLIC TRANSPORTATION
If there is a protest, all forms of transportation—such as buses, trains, subways, and taxis—become potential attack targets and should be avoided. Even being in a rental car is dangerous. Also, traffic is likely to come to a halt and travelers could find themselves stuck in a terrible traffic jam. If they must travel, it should be done by foot.

Local airline service is often disrupted in these situations, and travelers may need to access other area airports in order to leave an impacted area. Their ultimate goal should be to leave the area where the protests are, even if it means going to a city where they weren’t planning to do business.

Bottom line: your employees’ safety and security in these kinds of explosive situations are more important than the purpose of a business trip.