IRMI Update—Issue #168
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
September 5, 2007
In This Issue
Colleague,
Is risk management the dismal science? I know that descriptor is typically
applied to economics. However, risk professionals constantly talk of things
going wrong and, in many organizations, are seen as the naysayers. But even
with all our efforts, why is it that so little risk management occurs until
after one of our predictions comes true (or worse, something we failed to predict
happens)?
Terrorism wasn't seen as a serious risk until fanatics crashed airplanes
into buildings. Levee maintenance was ignored until they broke, and deteriorating
bridges were overlooked until one collapsed. Now, all of these are getting considerable
attention. But this is just government at work, you say.
It happens in corporations, too. How often does a senior manager ask, "Has
that ever happened to us before?" When the answer is "No," the risk is often
dismissed, with little consideration or preparation for the consequences of
the scenario actually occurring. This leaves the risk professional praying that
the calamity occurs elsewhere, convincing our own management that it's time
to prepare. Sound familiar?
So, how does risk management get the attention and resources it needs to
do an effective job? Must disaster occur before senior management takes the
possibilities seriously? How do you communicate real risks in a way that gets
attention without becoming your organization's (or client's) Chicken Little
and losing your credibility? Please [See reader
responses.]
Thank you for subscribing to IRMI Update. If you find it stimulating, please
recommend it to your colleagues.
All the best,
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Review Your Internal Crime Prevention Procedures—Now
is a good time to review your internal and external crime controls. The mortgage
industry currently faces internal dishonesty and external fraud problems. We
are also experiencing a slow down of the housing market, credit issues because
of large amounts of credit card debt, and a noticeable slowing of on-time payments
by individuals and many companies. It would be prudent to review your procedures
for identifying and preventing employee dishonesty and crime scams which could
dramatically affect your bottom line.
Financial pressures, whether from family illnesses, drug habits or just plain
overspending increase the risk of employees looking for a "quick fix." A typical
scam is the employee(s) linking up with an outsider and setting up a company
that will provide invoices for vendor services with no services actually being
rendered. Multiple payments to a vendor on a repeated basis are a "red flag"
for potential fraud. A background check of vendors receiving multiple payments
by internal staff to verify the legitimacy of the company should be considered
part of your dishonesty prevention procedures.
This is also a good time to review your crime-related coverages with your
broker to make sure you are properly covered for these risks.
By: Bill Horner, Producer Large Accounts
Bowen, Miclette & Britt, Inc.
Houston
www.bmbinc.com
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your tips. We'll
acknowledge your contribution as we did for Bill.
We have recently updated a number of the reference manuals in the IRMI library
and published new issues of The Risk Report and Captive Insurance Company Reports.
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the "What's New" summary page.
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