Daily Market Update - July 4, 2014

Risk assessment is getting better; risk management not so good… The threat to business from unlicensed software… Zurich calls for better data… Small businesses caught in a catch 22 of risk management investment… And motor insurance business may “encourage criminal activity” say MPs…

Risk Management News


Business not implementing their risk assessment findings
On a positive note, businesses increasingly report that they have strengthened their procedures for identifying risk. Less positive is findings from a new report that suggest that having made an assessment, the process frequently stalls. The study by non-profit business researchers APQC, says that new risks often do not make it into the business’ risk management strategy and are not always reported to the board. Suggestions to tackle the problem include greater involvement by board members in overseeing risk plans and also engaging staff at all levels to ensure that potential issues are assessed and acted upon with uniformity. Read the full story.

Business open to risk from unlicensed software
New figures highlight the importance of having strict controls on use of business computers. The Business Software Alliance has found that globally 43 per cent of software is not properly licensed. The risks for businesses are multiple. Software obtained through unofficial methods may contain malware or other modifications that may cause damage or steal data or sensitive information from business systems. Also, while reputable software companies will offer updates to their products; for example to ‘patch’ vulnerabilities; pirated or unlicensed software does not offer such protection. The study shows that where companies have software usage policy, staff are not always aware of it. Nigeria has the highest rate of pirated or unlicensed software at 81 per cent, but Asia Pacific, Central/Eastern Europe and Latin America are not far behind. Read the full story.

Zurich calls for better data
Data from Zurich, shows that nearly a quarter (24 per cent) of ID checks fail because the date of birth has not been entered correctly by the broker - suggesting some brokers are not actively checking important information. While brokers say they are generally receiving more support from insurers with regards to data accuracy at the application stage, 48 per cent believe insurers could do more. Ian McManus, head of personal lines broker at Zurich, said: “While data checking might appear an onerous task, for both broker and consumer, it’s imperative in bringing down the cost of insurance for our honest customers. The more we can get right at the outset, the less we have to fix later on."

The ‘catch 22’ of risk management
Small and medium size businesses are compromising risk management procedures due to financial constraints. A report from Italy by the Observatory Permanent on Risk Management shows that although poor economic conditions add to risk, it is the management of that risk that often suffers from tight budgets. While SMEs are focused on the need to adapt their businesses to respond to the changing face of commerce, they are neglecting risk management strategies, leaving their recovery open to weaknesses. In the report, 63 per cent of businesses were found to have no risk management techniques. Read the full story.

Motor insurance ‘encouraged criminal behaviour’
A report by MPs in the UK says that the motor insurance business is a “highly dysfunctional market” with insurers drive for greater profits leading to bad deals for consumers and some business activities that "inadvertently encouraged criminal activity." The report highlighted some insurance companies who settle claims for whiplash injury without requiring a medical examination. The MP committee says that such activities only serve to drive up insurance costs for all motorists. Read the full story.

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