Daily Market Update - August 27, 2014

Risk management should be a shared experience… Quake losses could be as much as $4b… Financial sector warned of systemic risk from cyber attack... And Lloyds executive highlights the importance of data…

Risk management should be a shared experience
As risk potential increases and becomes more complex, even the biggest companies are realising that its management cannot be the domain of one person, or even a dedicated team, it must be part of the culture. Every employee needs to be aware of the risks and how they can manage their part of it. Alison Taylor from Control Risks in New York says that it’s not about having the biggest or most expensive risk management structure; she highlights some of the big financial institutions who have been fined by regulators despite having ‘robust’ risk solutions. Taylor suggests that businesses need to ensure that risk management is holistic, taking in every part of the business, to avoid issues being in a silo. She says that a senior management team should lead the risk structure, but then ensure that that filters down to include all of those who may be at risk (or the risk themselves!). Read the full story.

Quake losses could be $4 billion
The 6.1 magnitude earthquake that hit California’s Napa Valley could be responsible for $4 billion of economic damage. Aside from property damage, the loss of stocks in the wine-producing region and the impact on the essential tourist industry will add to the pain suffered by many businesses at the weekend. The situation has been made worse by the timing; drought has meant an earlier than usual harvest so things are busier than would normally be the case. While some of the businesses are affected are vineyards others have suffered losses related to their wine stocks. One bistro damaged by the quake has lost a wine and liquor inventory worth up to $30,000. Read the full story.

Financial sector at risk of major cyber attack
The retail sector has been targeted recently in some of the most high-profile cyber attacks; only this week Sony announced it had been hit by a ‘denial of service’ attack by hackers. The financial institutions are being warned that they need to be proactive to avoid a devastating impact on their businesses. The International Organization of Securities Commissions has warned that an uneven approach to cyber threat means there are weaknesses. Chairman Greg Medcraft acknowledges that the US is leading the way in developing risk management strategies but also highlights that in a global economy the risk of cyber attack needs global policies. The IOSCO is urging security exchanges and the wider sector to consider cyber as a systemic risk. Read the full story.

Lloyds executive points to importance of data
Filip Wuebbeler is Senior Manager of the Market Intelligence team at Lloyds of London and says that access to reliable, up to date and relevant data is essential for keeping pace with the ever changing world. He says that by 2025 the emerging markets will have grown from the 8 per cent of commercial lines insurance it represents today, to 25 per cent with premiums totalling US$380 billion. Wuebbeler says one challenge has been how to distribute sensitive data to agents quickly and Lloyds developed their own solution to do that. Read the full story.
 

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