Risk & Insurance - April 2012

Cyril Tuohy MANAGING EDITOR

NEWS&NOTES

ctuohy@lrp.com

Risks Emerging

Welcome to the second annual “Most Dangerous Emerging Risks” issue of Risk & Insurance® Magazine. Launched in last year’s May RIMS issue, which debuted at the RIMS conference in Vancouver, our list of emerging risks was a big hit.

We are publishing our emerging risks editorial package in our April issue to again coincide with the RIMS conference, which this year takes place April 14-19 in Philadelphia.

Among the risks highlighted in this year’s edition are risks posed by the use of social media for punitive purposes against business and brand reputation, and the massive impact an agri-terrorism attack could have on the food supply chain in the U.S.

These risks represent exposures that are on the minds of just some underwriters, yet pose a widespread challenge to the industry. There is little data or loss history for these risks, and they are not on the radar of the average insurance buyer.

Two of our top emerging risks from last year made their share of headlines within the past six months.

On Jan. 23, 2012, the largest solar storm in eight years pummeled Earth. The storm, known as a “coronal mass ejection,” triggered brilliant auroras and reports of sporadic radio-communication blackouts in high latitudes. Some polar flights had to be rerouted.

Cyber leaks, documented last year as well, have proved to be one of the most pressing risk management concerns facing businesses in 2011 and heading into 2012.

Our thanks, once again to insurance carriers, brokers and vendors who participated in contributing to this issue.

THE GIRL WITH THE PRICEY INSURANCE

The Girl With the Dragon Tattoo was the riskiest movie of the year in 2011. Motorcycle chases, skateboard stunts and months of filming on location in Sweden all helped the U.S. adaptation of the Stieg Larsson novel earn the annual honor from Fireman’s Fund, the company that insures four of every five Hollywood movies.

Other movies last year had risky stunts and explosions, but “this one had it all,” said Wendy Diaz, the insurance company’s entertainment-underwriting director. Last year’s winner of the Fireman’s Fund award for riskiest movie was “Salt,” a thriller in which star Angelina Jolie did her own stunts.

the CEO was showing undue favoritism to his mistress.

Problems occur when the relationships fall apart or when one of the parties rejects the other’s advances. Some companies make workers sign what are called “love contracts” where participants stipulate that they have not been coerced into having a relationship.

frequency with which cyberattacks
are occurring in the digital age.
The Deloitte report concluded
that hackers have been
“outwitting” defenders and that an
“underground economy has evolved
around stealing data,” McMurtry
wrote.

WIKILEAKS STRIKES AGAIN Private intelligence firm Stratfor is in the business of shedding light on the world for its many clients. But anti-secrecy group WikiLeaks in February was the one shedding light on Stratfor, saying it had more than 5 million of the company’s e-mails and would publish them in collaboration with two dozen international media organizations. The information gives a look at the daily routine of the Texas-based think tank, whose clients range from local universities to megacorporations. One described a $6,000-a-month payment made to a Middle Eastern source, another carried bits of gossip dropped by a retired spy, and many were filled with off-color office banter.

MORE REASONS TO FEAR CYBERTHREATS

With the cybercriminal enterprise known as Anonymous wreaking havoc on computer systems, questions about the integrity and security of companies with significant Web presence are more prevalent than ever. Anonymous is credited with hacking into a teleconference between the FBI and international law enforcement officials in January.

Then came news that VeriSign Inc., the company that delivers people to more than half of the websites in the world had been hacked, with an undisclosed amount of information being stolen. If the company that runs the Internet’s infrastructure can be hacked, is anyone safe?

In a recent article posted on his law firm’s website, Cincinnati attorney Todd McMurtry, of Dressman, Benzinger LaVelle, mentions a Deloitte report that talks about the increasing

TREASURES LEFT BEHIND

For more than a century, Atlantic Mutual Insurance Co. covered yachts, steamships laden with gold, and even a seemingly indestructible passenger liner called the RMS Titanic. Then last year, the company itself sank— leaving behind a trove of nautical memorabilia that is up for sale.

Yet unlike the high-profile Titanic auction scheduled for April—it aims to unload 5,500 artifacts raised from the wreck, including teacups, passengers’ personal items and chunks of the hull, in one big lot—New York officials face the task of figuring out how to gin up interest for the low-profile Atlantic Mutual collection.

Currently stashed in the offices of an art gallery, the relics include model ships, maritime paintings, barometers, telescopes, sextants, gold nuggets and even a copy of the insurance policy for the Titanic’s hull (Atlantic Mutual cut a $100,000 check to cover its share of claims.) But the most valuable bit of loot may be the 342 leather-bound volumes that represent possibly the most extensive record of U.S. maritime disasters.

—Compiled by staff from news and wire reports

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SCHOOLS

WHEN OFFICE ROMANCE GOES ARWY

With spring comes rain, flowers and new romances—and its arrival may force companies to come to terms with the realities of office relationships. Forbidding them outright doesn’t work—as long as the parties are of equal status, there isn’t usually a problem, according to experts.

At a water sanitation plant in Los Angeles, however, the male CEO spent plenty of time with a female aide behind closed doors. He swore that they were just working on a project. The employees at the 75-person company didn’t believe him, and gossip about the relationship reached a fever pitch.

Productivity plunged as employees started to believe that

School Shootings Offer Grim Risk Management Reminder

While Chardon High School near Cleveland appears to have responded capably to a shooting in late February, it highlights the extraordinary difficulties of preventing violence and deaths in schools.

Schools nationwide
have sharpened their
preparedness ever since
the 1999 massacre at
Columbine High School
outside Denver. But
officials largely
have focused
on reacting
to violence, not preventing
it, said Leta Finch, national
education practice leader
at Aon Risk Solutions. “The
sad thing is this isn’t going
to be the last time there’s
going to be a shooting on
a school campus,” Finch
said. “If we want this to be
the last time, then we better
start moving quickly to
prevent it from happening
again.”