IRMI Update—Issue #168

An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
September 5, 2007

In This Issue

• Message from the Editor
• Risk Tip: Review Your Internal Crime Prevention Procedures
• What's New in Your IRMI Library
• New Expert Commentary
• Seven Weeks Left To Reserve Your Spot
• How To Get IRMI Update E-mails

Message from the Editor

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

Risk Tip

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.

What's New in Your IRMI Library

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. To make sure you don't miss any of this new information take 30 seconds to scan the "What's New" summary page.

For IRMI Online and Print subscribers

For SilverPlume Sage subscribers

New Expert Commentary

There are now close to 1000 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.

• Court Weighs in on Defective Construction as Occurrence—Pat Wielinski relates the recent Texas Supreme Court holding that unexpected/unintended property damage is an "occurrence" under the CGL.
• States Expand Employee Protection to Families of Servicemen—Paul Siegel warns employers to be cognizant of new laws and prepared to adjust their leave procedures to comply.
• Valuation Insights: Insurance Agencies and Brokers—Jeff Balcombe discusses factors that influence value: growth, profitability, customer relationships, and company-specific risks.
• Event Risk Financing—Don Riggin explains why risk managers, brokers, and consultants must find ways to see beyond the narrow world of "transfer or retain."
• Should We "Go Green"?—Dr. George Head asks whether providing premium discounts to firms with environmentally friendly practices help or hurt the industry.

Seven Weeks Left To Reserve Your Spot

Don't miss out on the 27th IRMI Construction Risk Conference. More than 1,400 of your peers have secured their place at the top networking event in the industry. Choose your workshops and reserve your hotel room before they are full.

How To Get IRMI Update E-mails

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