Cloud Computing: Is Your Company Weighing Both Benefits & Risks?
Cloud computing is a landscape-altering technology that is enjoying increasing rates of adoption — often implemented, however, without taking sufficient risk management precautions. Risk managers need to have a deep understanding of what cloud computing is, and why they need to be aware of it. While there are numerous advantages to adopting the cloud, there are also abundant risks, and having a comprehensive risk management plan in place is critical.
-
Cyber
Privacy Insurance: Avoiding the HMO Experience
Privacy, as it relates to an individual’s personally identifiable information, such as Social Security numbers, credit card and healthcare data, has become a cause célèbre of federal and state regulators. Increases in the scope of privacy laws continue to fuel a rise in publicly reported corporate data breach incidents. A company that suffers a significant data breach not only confronts the possibility of great financial loss, it may also suffer irreversible reputational damage—fueling a need for privacy insurance. Data breach incidents typically arise from the theft or loss of customers’ and employees’ personally identifiable information, either in an organization’s care and custody or in the custody of its third-party affiliates, vendors or business partners. For the past 15 years, insurance carriers have marketed privacy insurance (also called network security or cyber insurance) to cover the financial losses arising from a data breach. In addition to this risk transfer is a hidden treasure in some privacy policies—access to expert advice and services. Not all privacy insurance products are created equal, however. While most policies and endorsements address both first-party and third-party exposures, there are often wide differences in coverage terms, conditions, exclusions and financial limits.
-
Environmental
Structuring Multinational Insurance Programmes: Identifying Challenges and Solutions for Multinational Environmental Impairment Insurance Programmes
As patterns of business and trade continue to globalise, shift and grow in complexity, risk managers of international companies are increasingly seeking risk management and insurance solutions that respond to their changing multinational business activities.
Traditionally, demand for multinational insurance solutions has focused on property and casualty risks. However, as the risk environment grows ever more complex, companies are now seeking more robust solutions in respect of emerging risks as well, including environmental risks.
-
Executive
M&A Risk Management: Collateral Liabilities and Solutions
When global companies and private equity firms engage in mergers and acquisitions, they often confront obligations to provide collateral that are associated with the target entity’s insurance programs. These obligations specifically involve past and ongoing financial risks emanating from the deductibles or self-insured retentions that arise under the target entity’s workers compensation, automobile liability and general liability policies. These liabilities, in some cases, may be absorbed by the target entity’s wholly-owned captive insurance facility. Different state regulatory requirements can further complicate the treatment of these obligations to provide collateral.
Similar liabilities affect the acquirer in instances where the target entity has substantial surety bond requirements, which now become the acquirer’s obligation to fulfill and collateralize. How best to address such collateral responsibilities from an efficient risk transfer standpoint is the subject of this ACE Progress Report. The paper builds upon a series of other ACE Progress Reports assessing M&A risks.
-
Specialized
Using Surety to Facilitate Infrastructure Investment
Infrastructure investment will need to rise dramatically in the coming decades if countries are to keep pace with the world’s growing population and an increasing need for energy, transport and public services.
Insatiable demand for infrastructure will require the investment of tens – if not hundreds – of trillions of dollars over the next four decades, according to KPMG’s Infrastructure Investment report. Asia alone will require $11 trillion in basic infrastructure investment between now and 2030, with Brazil, Africa, India and China likely to be the markets to watch in the coming years1.
-
Multinational
Business Travel Insurance: Understanding Challenges and Making Informed Decisions
A multinational business travel insurance program can help companies provide comprehensive and consistent protection to all traveling employees in one centrally controlled, compliant solution.
While it is not surprising for a global insurance carrier representative to be focusing her attention on worldwide liability trends, for ACE’s Carol Zacharias, finding U.S. companies fully engaged in discussions about these trends is unfamiliar territory.
Multinational programmes are rapidly becoming the industry standard. Indeed, the most telling statistic for me from this study is that 83% of European risk managers expect to increase their use of multinational insurance programmes over the next three years.
This report is in two parts. Consistent with the rest of ACE’s series of reports on how to structure a multinational insurance programme, the first part sets out the general principles which need to be considered when developing a multinational programme for any class of risk. The second part of the report looks at the specialised context of marine insurance, Contractors All Risk (CAR) and Erection All Risk (EAR), with their distinct characteristics, and examines the extent to which these principles apply. This report ends with a checklist of questions and issues that the marine insurance community as well as the property insurance community should be considering when designing and implementing a multinational programme insuring marine risks. Our conclusion is that while marine exemptions allow the insurance of marine risk to take place in a relatively benign environment from a compliance perspective, they are not a panacea. Buyers, brokers and insurers should not be lulled into thinking that, just because compliance issues have traditionally had a lower profile in marine insurance, they do not need careful consideration in our increasingly globalised world.
Structuring an efficient, cost-effective multinational insurance program requires a close understanding of the evolving regulatory environment. Traditionally, risk managers have focused on whether a local jurisdiction permits insurance from unlicensed insurers to insure local risks, i.e., non-admitted insurance. These regulatory developments are not limited to increased scrutiny of insurance companies; they encompass both local insurance brokers and the local operations of parent company insureds. Many multinational companies are potentially unaware that their global insurance programs may be subject to compliance challenges in certain jurisdictions, and the unanticipated reputational, tax and other financial repercussions this may cause.
Renewable sources play an increasingly important role in producing sustainable energy and contribute a rapidly growing share of the world’s energy needs. Among other benefits, renewables enhance energy security, reduce greenhouse gasses and protect the environment. Developing renewable sources generates new jobs, aids rural development and fosters technological leadership. While there are a number of benefits, renewable energy projects tend to be complex and may entail a wider range of risks than anticipated. Identifying and managing the risks of innovative, and often, pioneering projects, can be highly challenging. Yet, effective risk management is a fundamental prerequisite for developing a financially viable project.
