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2015 Global Cyber Impact Report

May 15, 2015 Comments off

2015 Global Cyber Impact Report
Source: Aon and Ponemon Institute

Ponemon Institute global study, sponsored by Aon, identifies the relative financial statement impact of cyber incidents compared to tangible asset vulnerabilities.

Key findings:

  • Information technology assets are 39 percent more exposed than property assets on a relative value to insurance protection basis
  • Proliferation of mobile devices and Internet of Things to send cyberrisk skyrocketing over next five years
  • The report’s findings act as a roadmap for risk managers and finance, helping them take a broader look at their organization’s overall risk profile

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Improving Government Decision Making through Enterprise Risk Management

May 14, 2015 Comments off

Improving Government Decision Making through Enterprise Risk Management
Source: IBM Center for the Business of Government

While historically, the federal government has tended to focus risk management in the financial arena, the Office of Management and Budget (OMB) has recently launched a major reassessment of the government’s approach—encouraging the use of Enterprise Risk Management.

But OMB policies don’t readily translate into action. In this report, Webster and Stanton describe the evolution of federal risk management approaches and several agencies’ experiences in adopting Enterprise Risk Management. The authors asked cur­rent and former federal executives to describe the challenges of adopting an enterprise approach to risk management in their agencies and across the government. The report presents six challenges that they identified and concludes with six steps that organizational leaders can take to make Enterprise Risk Management actionable as a tool for successful implementation of agency programs.

New topical fire report: Fire Risk in 2011

April 27, 2015 Comments off

New topical fire report: Fire Risk in 2011 (PDF)
Source: U.S. Fire Administration

The risk from fire is not the same for everyone. In 2011, 3,415 deaths and 17,500 injuries in the U.S. were caused by fires. These casualties were not equally distributed across the U.S. population and the resulting risk of death or injury from fire was more severe for some groups. This topical fire report explores why different segments of society are at a greater risk from fire.

Increasing Concentrations of Property Values and Catastrophe Risk in the US

April 24, 2015 Comments off

Increasing Concentrations of Property Values and Catastrophe Risk in the US (PDF)
Source: Karen Clark & Company

Residential, commercial, and industrial property values in the US continue to increase faster than GDP growth and the general rate of inflation. According to KCC estimates, insured property values increased by nine percent from 2012 to 2014.

In aggregate, building values now exceed $40 trillion, and when contents and time element exposures are added in, estimated insured property values swell to over $90 trillion. Along with increasing values, there are highly concentrated pockets of exposure, particularly in regions vulnerable to natural catastrophes.

For example, tier one counties along the Gulf and Atlantic coasts account for over 17 percent of total exposure at $16 trillion. Six counties have over $1 trillion of exposure each and on a combined basis, account for more than 12 percent of the US total. One county—Los Angeles—accounts for over three percent of exposed property values.

One implication of increasing concentrations of property value is the higher probability of megacatastrophe losses. A major storm or earthquake has not occurred in a densely populated metropolitan area such as Galveston-Houston, Miami, or Los Angeles for decades.

This study shows that when a large magnitude event occurs in specific concentrated areas, the losses will be multiples of the PMLs (Probable Maximum Losses) the insurance industry has been using to manage risk and rating agencies and regulators have been using to monitor solvency. Insurers typically manage their potential catastrophe losses to the 100 year PMLs, but because of increasingly concentrated property values in several major metropolitan areas, the losses insurers will suffer from the 100 year event will greatly exceed their estimated 100 year PMLs.

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Insurers risk being sidelined by internet-savvy consumer generation

April 8, 2015 Comments off

Insurers risk being sidelined by internet-savvy consumer generation
Source: Towers Watson

Scarred by the financial crisis, price conscious buyers aged under 30 are driving a fundamental shift in how insurance is bought, according to Towers Watson. A survey of over 7,000 consumers across Europe’s largest and fastest-growing markets – including the UK, France, Germany and Turkey – found the advance of technology increasingly distancing the millennial generation of buyers from traditional purchase channels and sources of advice and influence.

The survey, The shifting balance of power, also found many under-25s to be far more risk aware and interested in financial security than previously thought, underlining the need for insurers to find new methods of engaging with these younger buyers.

Terrorism Risk Insurance Program: Renewed and Restructured

April 6, 2015 Comments off

Terrorism Risk Insurance Program: Renewed and Restructured
Source: Insurance Information Institute
From blog post:

The April 2013 Boston bombing may have marked the first successful terrorist attack on U.S. soil since the September 11, 2001 tragedy, but terrorism on a global scale is increasing.

Yesterday’s attack by the Al-Shabaab terror group at a university in Kenya and a recent attack by gunmen targeting foreign tourists at the Bardo museum in Tunisia point to the persistent nature of the terrorist threat.

Groups connected with Al Qaeda and the Islamic State committed close to 200 attacks per year between 2007 and 2010, a number that grew by more than 200 percent, to about 600 attacks in 2013, according to the Global Terrorism Database at the University of Maryland.

Latest threats to U.S. targets include calls by Al-Shabaab for attacks on shopping malls.

And a recent intelligence assessment circulated by the Department of Homeland Security focused on the domestic terror threat from right-wing sovereign citizen extremists.

On January 12, 2015, President Obama signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2015.

A new I.I.I. white paper, Terrorism Risk Insurance Program: Renewed and Restructured, takes us through each of more than eight distinct layers of taxpayer protection provided under TRIA’s renewed structure.

Insured losses from disasters below average in 2014 despite record number of natural catastrophe events, says Swiss Re sigma study

April 3, 2015 Comments off

Insured losses from disasters below average in 2014 despite record number of natural catastrophe events, says Swiss Re sigma study
Source: Swiss Re

  • Total global economic losses from natural catastrophes and man-made disasters were around USD 110 billion in 2014
  • This compares to global insured losses of about USD 35 billion in 2014, below the USD 64 billion-average of the last 10 years
  • There were 189 natural catastrophes worldwide last year, the highest on sigma records
  • Disasters claimed more than 12 700 lives in 2014, one of the lowest ever in a single year
  • Severe thunderstorm losses are trending upward – details in the special chapter of this sigma
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