Daily Market Update - July 14, 2014

​Chinese security organisation alleges cyber risk in Apple system… Report claims that financial industry ‘tolerates’ internet fraud… Shadow banking system tightens risk management rules… And how a humble door knob could be a fire hazard…

Chinese take a bite out of Apple
Apple is denying claims by the Chinese Institute for Security that a feature of their iPhone operating system is a threat to privacy and national security. The frequent locations setting, which can be toggled on or off by users of iOS7, could be used to gather ‘extremely sensitive data’ says the Institute. Apple has stated that its GPS functionality does not allow data to be accessed and that governments do not have access its servers. The issue is seen as a sign of distrust between the US and China following recent cyber-espionage allegations. For business issues like this raise concerns of data vulnerability but also the potential risk to employees if they are able to be tracked via their mobile devices. Read the full story.

Finance industry ‘tolerates’ cyber risk
A study by the Kapersky Lab shows that more than half of financial institutions reimburse customers following internet fraud without investigation. The report says that many companies believe it would cost them more to protect their systems than the cost of loses. A minority (19 per cent) of finance businesses rank financial loss as the main damage that can be inflicted through cyber crime; disruption to service and damage to reputation are often more important. While this may be the current thinking, as cyber crime increases and financial losses escalate not taking every precaution against the threat is likely to be a costly mistake.

China tightens up on financial risk management
The financial world has grown increasingly concerned about China’s ‘shadow banking’ sector, the largely unregulated non-bank lending industry which has been growing fast in the country. China’s banking regulator has now announced new rules that apply to both the shadow and traditional banking sectors. At the heart is setting up risk management and appraisal systems; they will also have to ensure that investors are properly informed about the risks involved in wealth management products. Read the full story.

Sun + door knob + robe = fire risk
No matter how hard you try it’s impossible to find every risk. An example of this occurred last week when an unconnected chain of events led to a fire causing thousands of dollars of damage. It was a beautiful sunny day in London and the rays shone through the window of a house in the south of the city, onto a crystal door knob and the refracted light then hit a bathrobe hanging in the bedroom. The robe caught light and the room was soon ablaze. The owners were out but had a smoke alarm which alerted builders working nearby. The London Fire Service has warned people against having crystal ornaments out of direct sunlight; another one to add to the risk assessment. Read the full story.

Zurich adds to its surety team
Zurich North America has created two dedicated contract Surety teams focused on specific customer segments, and today named Tom McClellan as the head of Middle Market Contract Surety and Dave McVicker as head of Large Account Contract Surety. Both will report to Mike Bond, head of Surety for Zurich North America, who said “We recognized that our mid-sized and larger national customers each have different needs and require focused underwriting resources to better service those unique needs”.

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