Skip to main content
search
All Posts By

robintek

Apr 01
Love0

COMBATING INTERNAL FRAUD: BE PREPARED

By Business Protection Bulletin

Not every threat to your business comes from outside. A nationwide survey reported 778 internal-fraud cases in 2012, involving such scams as phony bills (three in four cases), corruption, and expense reimbursements.

In more than half of these cases, the victimized company lost only $200,000 or less. However, fraud causes its real damage through private civil claims, potential government investigations, criminal prosecution, and negative publicity.

To help deal with this threat, experts recommend that businesses create a comprehensive plan to uncover potential fraud and organize a response. Internal fraud is usually detected by an employee tip-off, management review, internal audit, or even a “gut” feeling by an experienced executive. The first step after discovery is to conduct a thorough internal investigation to determine the facts, gather and preserve evidence, assess legal repercussions, and take corrective action – before an outside authority does. Also, being the first to report the incident to authorities can take the sting out of government investigations.

Corrective actions should involve making amends with the “victims,” revising or implementing corporate-compliance programs, and strengthening internal controls. These actions can include offering employees financial incentives to open up about their qualms.

Fidelity and Crime insurance can help protect businesses from the loss of money, securities, and/or inventory resulting from employee dishonesty. Crime coverage can cover the theft of property, losses due to forgery, and electronic wire transfer fraud.

Cyber insurance is essential, especially after a recent court decision which expanded coverage for cyber losses due under a Fidelity bond. Warns one insurance expert, “Not having cyber coverage is like playing hockey without a goalie.”

For more information on fighting internal fraud, feel free to get in touch with us at any time. We’re here to help.

Apr 01
Love0

BUSINESS PROPERTY INSURANCE: REPLACEMENT COST OR ACTUAL CASH VALUE?

By Business Protection Bulletin

Business Property insurance protects your building and property against loss or damage from theft, accident, and a variety of other causes. The policy will pay for replacing or repairing covered property or providing compensation for irreplaceable items.

If you don’t own your building you’ll still need to cover its contents: fixtures, furniture, office equipment, inventory and the supplies stored at your location or off-site.

The premium will depend on whether you choose to insure the replacement cost or actual cash value (ACV) of the property. Most Business Property coverage is written on a replacement-cost basis, which will reimburse you for replacing lost or stolen goods with new items at current market prices. This feature can help your business recover from the loss or theft quickly. (If you’re leasing equipment, the leaseholder might require you to cover it at replacement value.) You’ll need to revise your coverage when you acquire or dispose of property. Be sure to update replacement values over time; a computer worth $1,000 two years ago might cost half that today – on the other hand, the price of a desk might well increase.

Actual cash value coverage, which generally costs less, provides reimbursement for the depreciated value of covered property. If your business owns its own equipment, which you could replace easily with comparable goods at depreciated market value, the lower premium of an ACV policy might make it a more cost-effective choice.

As always, our agency’s Business Insurance specialists stand ready to offer their advice on choosing the coverage that’s best for you. Just give us a call.

Apr 01
Love0

HAVE YOU REVIEWED YOUR BUSINESS INTERRUPTION POLICY?

By Business Protection Bulletin

Business Interruption (BI) insurance makes sense. Consider Allison Dorst, a New Jersey resident who operates three e-commerce web sites selling sportswear. Last fall, Superstorm Sandy brought a prolonged power failure that shut down Dorst’s customer-service lines, causing sales to evaporate. She’ll also see lower sales because of a month-long delay in the delivery of next season’s styles. Fortunately, her Business Interruption coverage will reimburse the profits lost because of this lost revenue.

Although most middle-market business owners and managers understand the need for BI, they don’t always have the information they need to choose the right coverage. Some companies don’t have enough insurance to remain in business after they suffer a major loss, while other businesses might be buying more coverage than they need. When it comes time to renew your BI insurance, be sure to take a close look at the insured or reported values for the policy, as well as on the various coverage extensions that apply to your business, based on its operations. It also makes sense to consider additional coverages such as:

  • Contingent Business Interruption
  • Claim preparation fees
  • Extended period of indemnity
  • Expediting expense
  • Service interruption/power outage, including overhead transmission and off-premises lines
  • Extra expenses
  • Ordinary payroll coverage
  • Selling price of finished goods inventory
  • Ingress/egress
  • Loss of attraction
  • Civil authority
  • Sue and labor

We’d be happy to offer our advice, free of charge, in selecting the amount and types of coverage that can minimize your financial risk and keep you in business after disaster strikes. Feel free to get in touch with us at any time.

Apr 01
Love0

RISK MANAGEMENT: KEEP SAFETY IN THE FOREFRONT

By Risk Management Bulletin

Once employees have gone through safety training, make sure that they use what they’ve learned. When every worker knows and chooses the safe way on a daily basis, you’ll have a workplace with less chance of accidents and injuries.

This four-step approach to job safety will pay dividends:

  1. Team up to solve problems and improve safety. Create employee teams in every department to gather information on potential hazards, analyze problems, develop and test solutions, and implement and monitor results. Being part of a team makes workers feel that they share responsibility, which keeps your safety message top of mind.
  2. Talk up safety every day. Update employees on information that affects their safety. Provide ongoing feedback, praising safe performance, correcting unsafe behavior, and pointing out areas for improvement. Make sure that communication flows both ways. Urge workers to offer suggestions, identify problems, and pose questions – for example, through a safety suggestion system.
  3. Encourage employees to become hazard detectives – and reporters. Make every worker responsible for finding hazards. Create an effective system for reporting problems, and respond promptly to correct hazards that employees identify. This is harder than it sounds because it means that management has to listen when workers discuss safety concerns.
  4. Create a “want-to” safety culture. Encourage your workers to do the safe thing, not because they have to, but because they want to avoid injuries. Remind them of how many safety-related decisions they make every day – and how one bad decision is all it takes to get hurt.

For professional advice on creating or updating your workplace safety program, just give us a call.

Apr 01
Love0

USE SOCIAL MEDIA AS A RISK MANAGEMENT TOOL

By Risk Management Bulletin

Given the dramatic impact of social media on the speed and delivery of news and information, it makes sense to make this fast-growing technology part of your risk management program.

More and more reputational crises – such as the recent stranding of the Carnival Triumph cruise ship – are born on social networking platforms and can grow exponentially if mishandled. Consider how Apple Inc. responded to consumer displeasure with the iPhone 4 shortly after its 2010 introduction. Negative comments about the product spread quickly over social media channels, but were largely ignored by Apple executives until mainstream news outlets began reporting on its flaws.

Failing to actively engage social media users in conversations about crisis or business practice of your company means losing an invaluable opportunity to protect your reputation. Otherwise, you risk having other people tell your story.

Social media participation gives you a way to enhance this reputation through regular interaction with customers, business partners and the public. Using this tool to develop relationships and help people, rather than just sell products and services, can create some valuable allies.

Encouraging your employees to participate in social media offers a great way to use them as advocates for your company. A 2012 poll of more than 1,000 registered voters by Hill+Knowlton Strategies found that a corporation’s employees are the second-most trusted source of information about its business practices, second only to friends and family members.

Apr 01
Love0

DATA THIEVES TARGET SMALLER BUSINESSES

By Risk Management Bulletin

When it comes to hackers stealing confidential client information, most people think of their primary targets as mega-corporations; banks, credit card providers, online retailers, and so forth. (American Express, MasterCard, and Sony come to mind.)

However, more than half of small and midsize businesses have experienced at least one data breach in the past year, according to a recent nationwide study by the Ponemon Institute. What’s more, only 33% of surveyed companies suffering breaches notified affected individuals that their personal information was ever at risk – despite laws in 46 states that require such notification.

The primary causes of these breaches were employee or contractor error, lost or stolen laptops or smart phones, and procedural mistakes, according to the study commissioned by the Hartford Steam Boiler Inspection & Insurance Co.

The survey also found that:

  • Nearly nine in 10 respondents (85%) shared their customer and employee records with third parties by providing billing, payroll, employee benefits, web-hosting, or other information technology services.
  • Seven in 10 respondents (70%) said that data breaches are more likely to occur if they outsourced data.
  • Despite this outsourcing exposure, more than three in five businesses surveyed (62%) did not require third parties to cover costs associated with a data breach in their contracts.

“Smaller companies are targeted by data thieves, but they often don’t know how to respond when sensitive information they keep on customers and employees is lost or stolen,” warns Hartford Steam Boiler Vice President Eric Cernak. “Failing to act in a timely and effective way can harm the reputation of businesses and even risk legal penalties in many states.”

For professional advice on helping you minimize the growing financial and legal threats to your business from data breaches, please feel free to get in touch with our agency at any time.

Apr 01
Love0

HUMAN RESOURCES AND RISK MANAGEMENT

By Risk Management Bulletin

The primary role of human resources in risk management deals with employment practices; not getting trapped in wage and hour claims, discrimination and harassment litigation, and wrongful termination lawsuits. Then there’s leave management, including ADA and FMLA. Human relations can also play a key role in other aspects of managing risk for your business, such as:

  1. Workers Compensation – Insurance companies don’t pay claims, they finance them. When you suffer a Comp claim, your experience modifier (“mod”) increases to repay the claim during a three-year period at a high interest rate – which means that you should do everything possible to get employees returned to work.
  2. Cyber Liability – Poor employee practices can leave your information systems vulnerable. Coordinate your HR department with IT to make sure that new employees receive proper security orientation and terminated employees are managed effectively.
  3. Social Media – Risks from social media are expanding every day. HR should make it clear who owns your company Twitter account, set social media guidelines, and know how to respond to any perceived risks.
  4. Privacy Exposures – Whether it’s medical records (HIPAA), Social Security information, financial information, etc., your employees can both generate exposures and be subject to them.
  5. Disaster Planning – One disaster can wipe out your company overnight. HR can help develop a plan to protect you in the aftermath of a disaster.
  6. Employee Benefits – With a growing number of ERISA claims and a rapidly changing benefits landscape, HR should be responsible for staying on top of these trends.

Perhaps the greatest risk that human relations can help with is those involved with growing your business. HR professionals can provide strategic advice about what is needed for growth, and how best to move forward. Because it can be difficult to wear all these HR hats, we’d be happy to offer you our professional advice.

Apr 01
Love0

CALIFORNIA COURT PERMITS NOVEL SEXUAL HARASSMENT CLAIM

By Your Employee Matters

In Ventura v. ABM Industries, the employer was a janitorial service company that, according to the lawsuit, had a group of managers who drank on the job, touching and sexually harassing their female subordinates. Finding that that the defendants had engaged in threats of violence, the jury awarded the plaintiffs compensatory damages, plus a $25,000 civil penalty and $550,000 in legal fees.

What’s unusual about this case is that, instead of pursuing a sexual harassment claim, the plaintiff, sued under a California statute prohibiting hate crimes against protected categories such as sex. My guess is that the statute of limitations had passed for a traditional sexual harassment claim. The court rejected the defense argument that this statute does not apply in the workplace. The decision included a statement about the ratification of employee conduct that has significance for every employer:

“An employer may be liable for an employee’s act where the employer either authorized the tortuous act or subsequently ratified an originally unauthorized tort. The failure to discharge an employee who has committed misconduct may be evidence of ratification. The theory of ratification is generally applied where an employer fails to investigate or respond to charges that an employee committed an intentional tort such as assault or battery. Whether an employer has ratified an employee’s conduct is generally a factual question.”

The bottom line: An employer who faces evidence of wrongful employee conduct must do everything possible to discipline the wrongdoer (including termination, if warranted) or risk being accused of “ratifying” the misconduct. If the Ventura case had been brought as a traditional sexual harassment claim, the company would have automatically been deemed to have ratified the misbehavior because the perpetrators involved were managers.

Close Menu