Risk Management; New York

Watchmen

On June 18, US Treasury Secretary Timothy Geithner described the fundamental problem that allowed unchecked financial firms to run the economy aground. In his speech, Geithner was discussing the release of the Obama administration's plan for regulatory reform in the financial sector. Obama and the Treasury want to give this authority to the Federal Reserve, turning the central bank into what some have dubbed a systemic risk regulator. With its established network and vast resources, the admin...

The Systemic Risk Regulator

The Year of the Outbreak

Following a sharp rise of H1N1 "swine flu" cases in Australia in June, the World Health Organization (WHO) officially declared that the ongoing epidemic had reached pandemic status. This marked the first officially declared pandemic by the WHO in 41 years, though experts were quick to point out that pandemic status denotes how widespread a disease is, not its severity. What throws the risk posed by the current pandemic in stark relief is the ongoing toll taken by any number of diseases curren...

The Cape Cod Curse

Every summer, and sometimes in the spring and fall, the author's family vacations on Cape Cod, their favorite place in the world. For the last decade or so, every time they visit the Cape, some major catastrophe happens during their stay. Obviously, their going to Cape Cod didn't subtly affect world probability patterns or unravel some invisible pattern of karma to cause calamity -- it just felt that way, and they needed to find a pattern in it. Perhaps if they could see one, then they could ...

The Seeds of Risk for Profit

In an interview, Fred Pachon, VP of risk management and insurance for the Select Family of Staffing Cos, talked about his entrepreneurial approach to ERM. According to Pachon, the keys in succeeding risk management, number one is safety and loss control. If you prevent the losses from happening, you're already ahead of the game. Second, have a very solid claims management program that doesn't just report a claim to an insurance company or a TPA but maximizes performance of the claim from begi...

Smell No Evil

The makers of the popular Zicam line of homeopathic cold remedies were forced to pull their nasal sprays and gel swabs from store shelves in June after the Food and Drug Administration (FDA) warned that using the products could result in the permanent loss of the sense of smell. The FDA took action after receiving more than 130 reports from consumers who had lost their senses of smell after using the products. Zicam's manufacturer Matrixx Initiatives Inc had also received more than 800 simila...

Investigative Reports

According to a recent survey, more than a quarter of employees in the UK are so work obsessed that they cannot resist using a mobile device, such as a laptop, in bed before they go to sleep. The survey of 300 workers was conducted by Credant Technologies, and while the fact that 8% of respondents admitted that they spend more time on their mobile devices in the evening than they do talking to their partners, the security implications of this behavior exposes huge vulnerabilities for the organ...

The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty

The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty, by Sam L. Savage, is reviewed.

Lecturing Birds On Flying: Can Mathematical Theories Destroy the Financial Markets?

Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets?, by Pablo Trinia, is reviewed.

Clever: Leading Your Smartest, Most Creative People

Clever: Leading your Smartest, Most Creative People, by Rob Goffee and Gareth Jones, is reviewed.

Smooth Sailing

At this time last year the property/casualty industry was in the midst of a soft market that by all appearances would continue well into the future. The industry had just experienced two of its best underwriting years on record and industry surplus topped a record $525 billion. The economy began to display signs for the real estate downturn and subprime situation, but few recognized the depth of the problems on the horizon. Most industry observers believed that short of a major shock to the i...

Using Group Captives for Health Insurance

While the P/C market continues to create innovative single parent and group captive programs, the use of captives to insure accident and health risks has been limited. There have been less than 20 single parent health insurance programs established in the past 10 years. Many believe that captives do not apply to health insurance and should not be considered as a potential solution. These perceptions are usually due to a lack of information and understanding about captives and the role they pl...

The Choice Is Yours

Captives remain as important as ever, allowing organizations of any size and in any industry to take their risk, from the mainstream insurance market into an alternative venue where pricing, capacity and claims costs can all be controlled with greater precision. The tax breaks from operating a captive are, as always, another major incentive. Asia remains a relatively quiet section of the captive market, with a total of around 140 captives. Some of its domiciles are growing, giving the region ...

Local Rx: Developing Return-to-Work Programs in Unionized Companies

Unions often oppose a return-to-work program until they can be convinced that it offers them something. Sometimes, employers facing this situation drop the idea completely, believing the obstacles are too great. The employer who gives up too easily, however, may be losing an opportunity to experience significant savings -- and even improve union relations. The National Labor Relations Act (NLRA) bargaining obligations are among the largest obstacles to developing a program in the unionized en...

Looking at Risk Strategically

Over the years, there have been a number of major debacles, such as the current credit crisis, that might have been prevented or, at least, reduced in scope by looking at risks more strategically. This can be accomplished by conducting a dynamic risk analysis of the past, the future, macro/micro trends, the economy, and the political/regulatory/social environment to search for emerging risks. While it may sound complex, conducting dynamic risk analysis is not as difficult as it might appear. ...

Turning Chaos Into Clarity

A few years ago, companies worried less about customers paying invoices or suppliers going out of business. The current economy has changed that. Visibility is the result of enabling accurate connectivity between transactional and referential data across an enterprise, in many instances referred to as master data management. In order to achieve this level of visibility, a company has to start with accurate reference data. Visibility can deliver efficiencies, throughout your business. Cross-fu...

Controlling Public Perception

It is fair to say there are companies that still enjoy the public's confidence. Among insurers, GEICO may be a case in point because of a popular advertising campaign and, to be sure, because Warren Buffet happens to own it. The problem for the insurance industry in terms of public perception -- and the potential effects of public opinion on lawmakers and regulators -- is a pernicious form of linkage. The following initiatives provide a form of insurance that cannot be based on actuarial tabl...

How to Choose a Domicile

Choosing a domicile for a captive insurance company is a process of elimination. Often, the choice comes down to prior relationships with service providers or a captive owner's subjective impression about a jurisdiction. The choice narrows quickly, however, once one accounts for certain factors. Captive insurance income may be tax-favored, although in different ways depending on the jurisdiction and status of the owner. A captive may be better served, however, to incur state premium tax (at a...

Datebook

Hindsight