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Cyber Security – The Stark Reality

It’s in the news every day. Just recently there was a report of a breach at the IRS. You’d think that of all of the government entities holding personal information the IRS would be one to have an all but impenetrable and completely locked down system. In addition there is more and more media focusing on cyber-security related to smartphones and how easy it is for a hacker to gain access to phones and all of the information contained therein.

The hard fact is that cybercrime is pervasive. Cyber thieves are crafty and persistent in finding ways and opportunities to breach security to gain access to personal information and beyond.

Cyber Attack Realities

The Risk – If your business uses computers, chances are someone will try to hack them.

The Fallout – Data breaches can result in fines, litigation, business interruption and reputation damages.

The Solution – Having the right protocols and insurance policies in place can mitigate the damage caused by a cyber-attack.

The ramifications of a cyber-breach can be both financially and operationally catastrophic to any business. We live in a cyber-world where we must learn to deal with the associated risks from both a business and a personal perspective.

How can a business best deal with Cyber Security?

Start by performing risk assessments from both an IT as well as an insurance perspective. As technology is constantly changing, this should be done on a continuous basis. Insurance coverage aspects need to be evaluated in-depth as exposures for each business entity, as well as specific coverage offerings, will vary from insurance company to insurance company. Do your due diligence. Here are just a few of the areas to consider when limiting exposures and liability:

Initial Steps in the Risk Management Process

Businesses should first focus on developing a robust internal risk management program, including the establishment of strong policies and procedures; Training and insurance can reduce the chances of a data breach and mitigate the damages if a breach occurs.

In general an organization should review the following areas to begin developing a well-rounded risk management program:

Corporate Security policy
Asset classification and control
Personnel security
Computer network and management protocols for vulnerability
System access controls
Privacy and regulatory compliance

Then, ask yourself “what does our company have in place to mitigate our exposures?”

Do we have an effective privacy policy? A policy that your company does not follow is worse than not having a policy at all; therefore, ensure that your policies are distributed among, and followed by, employees.
Do we have an effective privacy breach response plan? Review your incident response plan regularly and ensure that the team members are prepared to jump in when an incident occurs.
Do we continuously test our disaster response and business continuity plans? Work closely with your business partners to ensure that they are properly handling your confidential data. Vendors are the cause of at least 1/3 of all data security incidents.

Continually Assess Risks and Exposures

Companies should continuously assess risks, exposures and insurance policies. It is imperative to conduct a yearly security risk assessment to identify any vulnerability in your processes and procedures for handling confidential data. Some laws, such as HIPAA, require periodic risk assessments, and as such it is good practice as organizational risks change with changing practices.

An assessment might be as simple as asking the following questions:

What are our risks/exposures? These can be broken down into two parts, first party claims and third party claims:

First Party Claims would include Forensic Examination Expenses; PCI/PFI Audit Costs; Privacy Notification Costs; Privacy Counsel Fees; Mailing Notification Costs; Credit Monitoring & Call Center Services; Business Interruption (loss of income); Intellectual Property Loss; Public Relations; Extortion.

Third Party Claims include Claims by Private Litigants, Consumers, or other businesses; Claims by State Attorney Generals; Claims by FTC; Regulatory Fines & Penalties; PCI Fines & Penalties; Loss of Business; Damage to Reputation

Insurance coverage aspects address the exposures listed above. However, keep in mind that each insurance carrier will have various definitions, terms and conditions that will play a part in each of these coverage areas. Some of these terms include:

Invasion of Privacy and Identity Theft
Breach of Security, Network Disruption
Intellectual Property
Errors & Omissions
Defamation & Product Disparagement
Discrimination & Harassment
Extortion
Digital Theft & Forgery
Business Income
Disaster Recovery
Crisis Response Costs

Consider:

What are the threats? Cyber criminals, organized criminal groups, Bot-network operators, hackers, insiders, phishers, spammers, corporate espionage, even terrorists.
Where are we exposed? Corporate intellectual property, employee data, client data, third party data, web sites, social media outlets. What parts of our systems are at risk?
What are the gaps in our existing coverage? What’s covered and what’s not – how will our policy respond is there is a cyber-security event? How can the gaps be addressed?

The bottom line here is that cyber-attacks and data breaches have become an everyday threat to both individuals and businesses. The diverse types of cyber risks are ostensibly limitless and it’s all but impossible to predict exactly how and when you or your business may become a bull’s eye for cyber-criminals. Be diligent in your efforts to control what you can and mitigate exposure where possible.

Business Insurance & Managing Risk: You Don’t Know What You Don’t Know

What I do know is that it is hard to admit that you don’t know what you don’t know. Recently I gave a presentation at the 2015 Business Law & Corporate Counsel Symposium. The presentation was about business insurance and managing risk for businesses, the real message I wanted to leave my audience was that CEO’s, CFO’s and their advisors, like attorneys need to “know what they don’t know” and seek out an impartial expert to look out for their best interests.

How Well Do You Understand Your Business Insurance?

Over the years – I have heard so many people say “I didn’t know that”, “No one ever explained that to me” or “I really didn’t understand that”. It is all too common that people don’t fully understand the insurance products and services they have been sold.

So much focus is placed on the premium (cost of the policy) that the recovery aspect is overlooked and therefore not understood. When purchasing an insurance product you should understand how you will be indemnified should a loss occur (paid for your loss and returned to the condition you were in before the loss, no worse no better).

The exposures businesses face in the world are vast, complicated and dynamic. Insurance is only one of the avenues to address and transfer risk, but that too is complex and dynamic. There are many moving parts to coordinate to ensure a company is properly protected.

Here is a startling statistic: 75% of businesses that suffer a catastrophic loss go out of business within two years of their loss. I can promise that the reality and root cause of most companies’ problems who suffer these catastrophic events is that:

They didn’t “know what they didn’t know” about insurance and their coverage, and
They were SOLD insurance rather than purchased it – and there is a BIG difference

A number of attorneys at the symposium voiced their agreement and shared experiences regarding the misunderstanding of an insurance contract.. They valued the insight an impartial consultant can provide. That says a lot right there.

Be in the know! Seek out assistance to understand what you don’t know – it will pay off in the long run.

Understand the Insurance Adjustment Process

It is not unusual for the insurance company to compile values that disagree. These differences are resolved through Claim Adjusting, or if necessary through the Appraisal procedure, a simple, inexpensive form of arbitration. However, many recent changes in wording of some policies have included striking-down the Appraisal process and instead now require parties to go to court.

To adjust is to negotiate. An adjuster is a negotiator. Think about that for a moment. This simple fact seems the most difficult for policyholders to realize. The dictionary defines the word adjust: To settle or bring to a satisfactory state, so parties are agreed in the result: to adjust our differences, to bring to agreement, to determine the amount to be paid, as in settling an insurance claim.

Typically in the past, only the person representing the insurance company has been considered the adjuster. Historically, the policyholder has been considered–for lack of a better word–the adjustee, or the one receiving the adjustment. If you can’t imagine yourself as an adjuster, it is probably because of the word itself. When adjusting is foreign to your background, education and experience, it only follows that you would have difficulty assuming that role.

We are all adjusters, in all our dealings. You are an adjuster when you have bargaining power and are prepared to deal from a position of knowledge and strength. This mental image is important for all your negotiations. The winning combination in adjusting is having an organized, methodical, and self-confident approach. Actually, winning in adjusting is not the act of one party driving the other party to defeat, as some would believe. The perfect adjustment occurs when the enlightened needs of both sides are met to the satisfaction of both sides.

A company adjuster facing a knowledgeable policyholder usually realizes that the claim adjustment will be a cooperative effort. Also, this mutual respect may more likely lead to mutual agreement.

Probably the most difficult aspect of acting as one’s own adjuster is in having to enter the realm of the unknown at a time following a disaster. Psychologically, most people are not up to the task under these circumstances. It is very common to see people in a state of shock, confusion and helplessness. Those who are objective, informed and prepared are more inclined to be emotionally level and competent.

The time of a personal disaster is not the time to be thinking about all of this for the first time. Think about it now and take comfort in the knowledge that you are able to protect your interest without feeling at a loss, if the unthinkable does happen to you.

Some adjusting options to consider:

Have the insurance adjuster representing the company handle your claim.
Utilize a public adjuster. Yes they do exist, they’re few and far between, but they do exist.
Adjust the claim yourself. This means much more than just telling the company that you had a loss. This means calculating what you are entitled to, presenting it in a way that they understand you have some knowledge of what you are entitled to and knowing how to negotiate best on your own behalf.

“Drive or be Driven”! The idea that you either are going to control the business transaction (because that is what it is at this point) or you’re going to want to be taken care of and just watch to see how it turns out.

It is important at the very outset to decide how you are going to handle the matter. Once you surrender authority it’s difficult to reclaim.

Here are a list of steps to take in the event of loss (these can be adapted to conform with your business):

Property Damage

Mobilize your emergency response organization.
Protect your property from further damage.
Fix leaking pipes.
Restore fire protection.
Temporarily support collapsed or impaired structures.
Notify your insurance broker or your Insurance Company claims representative, giving the date, time, cause and location of the loss.
Board up the premises and correct unsafe conditions, if applicable.
Isolate the damaged area whenever possible.
Separate damaged from undamaged property.
Restore power to critical areas such as freezers.
Establish a loss control account to detail all expenses incurred as a result of the loss.
Retain all invoices, time sheets, etc., to ensure all costs are captured and attributable to the loss, and to prevent an overlapping of normal costs with these expenditures.
Obtain identification of all civil authorities involved such as fire, police, health department, building inspector, etc.
Retain any piece of equipment or other property that may be the cause of the loss. This should be tagged and identified as to its function and the time and date of the incident in order to establish a chain of custody.
Take photographs, if possible, prior to the removal of any debris.

Business Interruption

Estimate the period of interruption to operations due to the property damage event.
Determine the direct effect to operations or production, including any indirect or contingent effects of the shutdown.
Determine if your company can use other facilities to make up the loss.
Determine if your company can make up production through overtime or weekend work.
Determine if finished goods inventory can be utilized to offset a loss of sales.
Determine if your company has any extraordinary sales commitments.
Determine if your company has any sales contracts that can be delayed.

Still concerned about the insurance claims and adjustment process? Contact us, we are here to help.

8 Important Points When Presenting Your Loss & Claim

In the previous post Proof of Loss: The proof is in the pudding, we shared the importance of knowing how the business insurance claims process works so you can get paid what you are due if you suffer a loss. These 8 points will help you navigate the claims process successfully.

1. Familiarize yourself with lines 90 through 122 of your insurance policy or the “Duties in the Event of Loss” section. You cannot afford to violate these duties. This policy section also grants authority to file your claims as well as authority of a third-party to file a claim on your behalf.

2. Calculate your loss first before filing your claim. You have the advantage of telling the Company Adjuster you know something of what you are entitled. Compare this to just reporting an uncalculated loss and giving the Company Adjuster the authority to direct and decide how much you should claim.

3. Remember these time limits:

60-day time limit, after date of loss, to file the Proof of Loss.
20-day time limit, after Appraisal notice, to select an Appraiser.
12-month time limit, after date of loss, if you elect to file a suit.
60-day time limit, before date of loss, for certain coverage pertaining to vacant or unoccupied buildings.

4. Prove adequate insurance. If the insurance company determines that you carried too little insurance and attempts to impose a penalty, remember, you carry the burden of proof, you may still be able to eliminate penalties by proving adequate insurance. For example: if the problem involves a building structure, you may shop for a total replacement cost estimate much the same as insurance companies shop for repair estimates. You may locate a licensed building contractor who will establish that your insurance was adequate when compared to the contractor’s replacement estimate. Replacement estimates are not to be confused with repair estimates.

5. Salvage is that which is saved. By claiming only the portion of your loss that remains after deducting salvage value, you maintain ownership of that item and the salvage remains your property. Salvage bids establish salvage value.

6. Save all remains of property until you have received your settlement. The burden of proof is on you as the policyholder. Anything to help prove your loss is valuable. Photos, warranties and manuals are also helpful. If you must discard certain debris prior to settlement, it would be wise to first take photographs.

7. Understand the Appraisal Procedure. If you have differences with your insurance company, you should know of a quick, fair, inexpensive procedure called Appraisal. It is a form of arbitration with a binding award conducted by disinterested parties that is designed for “amount of loss or damage” disputes. You must first remember to file the Proof of Loss, even if not requested by the company, within 60 days from the date of loss. Make certain if you go beyond 60 days that you have been provided a written extension of time by the insurance company—similar to a tax-filing deadline. You may request the Appraisal procedure within a “reasonable” time after filing the Proof of Loss or at the time of filing the Proof of Loss. NOTE: Many recent changes in wording have included eliminating the Appraisal process and instead require parties go to court.

8. The filed Proof of Loss represents the amount of your claim and is a demand for payment. If your loss exceeds your insurance coverage you may wish to claim that portion as an income tax deduction. To protect that deduction, be sure that the Proof of Loss form states all of your loss and not only your loss covered by insurance.

Watch for the final post in this series… Understand the Insurance Adjustment Process.

Proof of Loss: The proof is in the pudding as they say

From an insurance perspective it is important to know how you can recover when your business suffers a loss. Questions to consider when filing a business insurance claim:

1. Will your insurance coverage be adequate?

2. How do you go about getting a recovery?

3. What are your responsibilities in the process?

Knowing how the claims process works, what you should be prepared for and what you can expect when you face a loss is critical to know. The proof will be getting paid what you are due and the pudding is how it all works.

Understand Insurance Claims Concepts and Procedures

The purpose of purchasing insurance is to protect company assets from suffering loss. Those assets are both tangible and intangible. The insurance policy is based on the concept known as indemnification. This means that the insurer is to make the insured whole again assuming that the proper coverage and limits were purchased. In other words the company is to be put in the same position they were in prior to the loss, no more, no less.

Policyholders have a responsibility to act with consideration, demanding what they clearly are entitled to but not asking for things they believe are unlikely to be insurable. This includes creative claim theories, acting with a sense of fairness on valuation issues, and being transparent. Remember, insurance is a vehicle for financing fortuitous risk and not a means of becoming an occasional profit center. In order for insurance to work, a pooling of losses and premiums is required. In most years, an insurer is using your premium to pay for losses of others.

It is extremely important to remember there is a time limit of 60 days after the date of loss, in which you must file the form, Proof of Loss with the insurance company. Just reporting that you had a loss is not enough. You may lose your rights and leverage if this form is not filed within the time limit. Think of this deadline the same as you would for a tax-filing deadline–with a timely filing or written extension.

Some tips for a well-received claim:

A typewritten claim has a neat, more acceptable appearance
List all items separately
Try not to group items into categories
It is best to list property building-by-building and room-by-room in order to relate back to its physical placement

The depreciation shown varies according to condition and quality of property and only represents a general method of calculation. Your own calculation would largely depend on the life expectancy of your property.

Original or duplicate receipts are an important way to prove a loss. If no receipts are available, verification of ownership can be proven by affidavit. An affidavit should list the property in question and be signed by disinterested parties who thereby verify ownership and possession. Also, pictures are worth a 1,000 words – when there is a fire loss for example, many items in a room become unrecognizable – so it is a benefit to take pictures of rooms to document what exactly was in them to help you remember.

But before you can present your claim in the proper fashion, there are some duties that you must be familiar with so as not to jeopardize your recovery.

Watch for our next post which will cover 8 important things to keep in mind when presenting your loss and claim.

Cost of Risk & The Price of Your Risk Management Program

Every facet of your organization affects your cost of risk. It is difficult, at best, to quantify all aspects of this total cost of risk. For example, if you manufacture specialty equipment or products and you are faced with a recall, what is your loss of reputation or market share? In contrast, other components of your total cost of risk are easily quantifiable, such as insurance premiums, or the downtime of a custom piece of machinery and the resulting lost production.

Total cost of risk is an insurance term describing the cost of both pure and speculative risk. Additionally, cost of risk is synonymous with price — the price of your risk management program. By taking a total cost of risk approach you can positively affect your price.

The goal then is to structure a risk management program that protects the four main asset categories of your business:

Organization
Personnel
Property
Net income

The structure of your risk management program looks to the endgame of your price. To reach the endgame you seek, you must first further define Risk Management into four key tenets:

Identification of exposures through analysis
Implementation of control measures to those exposures
Risk transfer or financing
Management of current and future exposures

Identification of Exposures – Things to Think About

Exposures are both qualitative and quantitative. Analyses into both arenas offer the starting foundation of understanding your current exposures to develop forward-thinking approaches. The qualitative discussion will confirm if the business initiatives are in correlation to the risk management program.

As a CFO, you should look to confirm that your risk management approach supports your overall business objectives. What risks or concerns do you have relative to your business i.e. what type of event would shut you down? If that concern happened, how would your income or cash flow be affected if there were unforeseen depletions of capital or a shutdown in the plant?

A discussion on the qualitative aspects of your business provides the important details needed to solidify the most appropriate game plan to your endgame, price.

What is your viewpoint on risk? Are you/your company risk averse? Is your company in a financial position to take on more risk versus transferring that risk to another party or contractually to a carrier?

To help determine your risk aversion, it helps to assess your company history. For example, if you are a start-up company, cash flow and funds are typically tight, so you are more likely to be adverse to risk to protect the financial viability of your start-up organization.

Conversely, if your company has a 20+ year history, there are also risks, including becoming obsolete, stagnant, or too conservative with your business plan.

Furthermore, consider your industry, market position, and competition in positioning your risk management solution to the changing needs and direction of your business.

Quantitative analysis supports the qualitative interview. Look at the “hard numbers” and prior losses to identify trends in your performance. Also analyze losses to identify a variety of variables, such as:

average incurred costs per loss
total incurred trends
top loss drivers
locations with high frequency issues
fraud behaviors
reporting lag time
frequency vs. severity ratios
OSHA recordable performance

The results of this type of analysis will reveal opportunities to approach the critical areas driving your total cost of risk, price. This evaluation will help to isolate the root causes of these problematic areas and look to implement control measures to mitigate this exposure.

Implementation of Control Measures

Now that you have identified exposures you can focus the appropriate resources to areas that will deliver the highest impact on your bottom line. Control measures should be designed from a pre-loss perspective.

An estimated 75 percent of commercial insurance expenses are claims driven. Look to control and reduce this percentage through pre- and post-loss control measures.

A comprehensive loss control evaluation points to strengths and weaknesses in loss control programs. One may have strong management leadership behind his or her initiatives but have no employee buy-in or participation. Create a risk reduction culture, establish a safety committee, delivering a comprehensive employee safety education campaign. Your business operations will determine the types of measures and approaches to take in addressing your exposures.

There are many post-loss or cost containment strategies. A proactive and effective Return to Work program is one strategy that positively affects your bottom line: offering a bank of modified duty jobs for employees and informing the doctor there is modified work available.

Also, establish a relationship with a local occupational medicine clinic. Interview them to learn about their services and tour their facilities. Invite the physicians into your business to get a first-hand look and understanding of your operations. By providing them with the details of your operations, they can accurately evaluate reported injuries to confirm if they are work related.

Fraudulent claim behavior can drive the cost of risk out of control. The National Insurance Crime Bureau often approaches insurance fraud rings between doctors, physicians and people. Whether it’s an auto accident or alleged workplace accident, send a clear message that fraud will not be tolerated.

Anti-fraud tactics include educating employees on the effects of insurance fraud through payroll stuffers and worksite posters, and offering safety incentives for solid performance. Also, keeping a motor vehicle accident kit in each one of your company vehicles, along with a disposable camera, allows you to document evidence, providing a stronger subrogation results.

An active Loss Control Program and post-loss procedures are key to cost containment.

Risk Transfer/Financing

Once you have identified exposures and created control measures, you can focus on the remaining exposures to transfer and/or finance. You will want to address questions such as: How much risk can you afford to assume in-house? How can we assist in contractually transferring that risk to a third party? Lastly, what portion of the exposures do we want to finance through an insurance policy?

Addressing these questions offers a direction as to how to approach the financing of your risk. Think about current cash flow needs. Are account receivables current? If there is a lag, how long is it, and are there resources to correct it?

Considerations involve self-insured retentions if you have a mature loss control program and the financial reserves to cover those shock losses that occur. Therefore, a combination of insurance and non-insurance strategies should be considered.

Manage Your Exposures

It is estimated that 25 percent of businesses that sustain a major catastrophe are no longer in business within a year’s time. If there is an interruption in your operations, are you prepared?

In a dynamic business environment, risks and exposure change constantly. Therefore, continual monitoring of the programs in place is essential, as well as future business expansions, will help to dictate the course of your risk management program.

We highly recommend you:

Develop a Strategic Action Plan to put the needed control measures in place, including a Disaster Recovery Plan. This involves backing up your policies and procedures.

Offer consistent loss control policies and procedures to all divisions and departments within your organization.

Cost of Risk Resources

To develop the most appropriate risk management program for your organization, you should look to approach ‘insurance’ through a variety of insurance and non-insurance strategies, such as:

Identification processes (qualitative and quantitative)
Loss analysis tools to uncover exposures
Implementation of pre- or post-loss initiatives that address cost containment
Business continuation planning/disaster recovery
Risk financing options, retained losses or transferred
Regulatory compliance issues

As you can see, risk management and protecting your organization is not about just buying an insurance policy. It is about developing a strategic action plan, execute on that plan, and fully commit to the monitoring and support of those initiatives.

“Total cost of risk is an insurance term describing the cost of both pure and speculative risk. Additionally, cost of risk is synonymous with price — the price of your risk management program. We at Premier Risk Management take a total cost of risk approach to positively affect your price.” We dig deep to advocate for you.

This Cost of Risk, Price Control Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

Experience Modification: 5 Steps to Control Your Own Destiny

Many times when a client engages us to become their Outsourced Risk Manager, in the interview stage we often discover that their workman’s compensation costs are high relative to the employee population and work functions. Typically we discover that the experience modification factor is high (which is commonly referred to as a “debit mod”, over 1.0 and beyond) and in many cases the client thinks their experience modification is a consequence they can’t influence. What we find when we investigate the root cause is that their program has been neglected and they don’t have proper procedures in place to mitigate claims. This means that when claims occur they are reported, sometimes improperly, and then left to the insurance company to handle with no follow up whatsoever.

You CAN effect and control your experience modification by following a few strategies.

Here are 5 things you can do to help reduce your workers compensation experience modification:

Report all claims to carrier immediately. Use a phone call to alert carrier to any serious, potentially serious, or suspect claims.
Investigate accidents immediately and thoroughly. Take corrective action to eliminate hazards.
Take an aggressive approach to providing light duty to all injured employees upon their release from treatment. Supervise light duty employees to assure their conformance with restrictions.
In serious cases that involve lost time, communicate with the claims adjuster so that they recognize your interest in returning the injured employee back to gainful employment.
Set safety performance goals for persons with supervisory responsibility. Success in achieving safety goals should be used as one measure during performance appraisals.

Review and analyze the root cause of the elevated experience modification, create a plan to address the issues head on and then work the plan. Be aggressive and be in control.

Risk Tip: Pay more attention to loss control

Being proactive means savings in the long run.

Comment: Risk management is all about reducing and mitigating the exposure to risk which in turn reduces costs. Unfortunately we see many companies who do not focus on loss control measures until it is too late. An employee is injured, a fire occurs, an invitee trips and falls. Most of the time with smaller to medium-sized companies it is the insurance carrier loss control representatives who point out potential hazards.

Bottom Line: Over time, by becoming more proactive in your approach to loss control it will serve to help reduce the overall cost of your organization’s insurance and risk management program. By taking a proactive approach to loss control you also place your company in a strong position when it is time to renew your coverage. Insurance company underwriters will look favorably on this and will be better able to justify rate reductions on your account. This is an area of focus where it cannot be “business as usual.” Risk and exposures change constantly and must be addressed in the same fashion.

End of Year Risk Tip: Review Contracts Up For Renewal

As we move into a new year…a number of business related contracts come up for renewal. With that in mind, we suggest that you spend the time to review, in detail, your contracts such as leases, purchase agreements and services contracts.

Comment: Many times contracts are signed without a proper review and understanding of the liability being assumed and insurance implications. Most contracts and leases require you to assume a variety of liability. The pertinent clauses and wording are not always reviewed and addressed properly placing you in breach of contract as soon as it is signed. Unfortunately these are not addressed until after the fact, placing you in a very difficult position. We see this happen more often than not in construction contracts. The haste to get projects underway precludes proper review of the documents defining the projects terms and conditions. This can be a most costly mistake.

Bottom Line: Have your contracts reviewed by your attorney and insurance advisor prior to signing them. Hopefully this will serve to avoid taking on any unnecessary liability or exposure.

Contact us for a FREE consultation

Awareness: An Important Step To Protecting Your Business

No matter what your business is it is important to keep yourself, employees and those working (inside and outside) your organization informed of safety issues.

We had a client come to us for help with a very large residential portfolio. Most of the buildings were located in New York and were garden style brick apartments. They had several very large losses that were prohibiting them from finding insurance coverage at a reasonable cost. One of the largest losses was a result of a Christmas tree fire. The fire took three lives as well as disrupting the lives of dozens of residents and causing hundreds of thousands of dollars in property damage. In addition to that, they had two other Christmas tree fire losses that took place in separate buildings — I would say that this was a problem!

Maybe these fires could have been prevented had the landlord informed the residents of the potential dangers related to Christmas tree fires. The landlord could have sent out a notification informing residents of Christmas tree safety and raise awareness with the tenants. Would this have totally prevented that particular fire from happening? Maybe, maybe not – but sometimes simple preventative actions can make an impact on outcomes.

Believe it or not, the larger devastating fire was a result of the tenant using “live” candles on the Christmas tree. The landlord did send out a notice to all residents that the use of real candles on Christmas trees was prohibited.

A major factor in reducing risk is awareness. Risk Management is all about awareness. Developing a risk management program geared toward awareness is essential. Organizations are busy conducting business everyday, it is difficult for them to concentrate on what they might consider to be extraneous issues. But once these issues are addressed business owners are generally thankful that they were brought to their attention. We all have a lot of different things on our minds everyday, however if we make an effort to draw attention to a particular issue – that is more than half the battle…especially ones that we might consider to be common sense.