Loss exposures have several elements to consider.The first element is the type of exposure that we are dealing with. Transfers via insurance. Remaining independent in today’s marketplace is a tough ask of brokers. Indeed, the importance of an organization’s employee participation in risk management of crime losses is integral. Finally, managerial controls must be in place to support the overall risk management process. The list of perils can be quite lengthy within each exposure. Risk management of crime exposures requires a focus on hostile human conduct. As Indian politician Jawaharlal Nehru said, “The policy of being too cautious is the greatest risk of all.” – taking too many risk control measures can be a bad thing. We use cookies to make your website experience better. A loss exposure is a possibility of loss, it is more specifically, the possibility of financial loss that a particular entity or organization faces as a result of a particular peril striking a particular thing that you have assigned value to. Save my name, email, and website in this browser for the next time I comment. * Effect of education (frequency) as much as half of the perpetrators had no more than a high school education. Dealing with employee characteristics such as gender, age, race and religion (or any type of demographic profiling) requires the employer’s risk manager to exercise extreme diligence in complying with human rights laws. Risk controls can be used to prevent losses from occurring and/or to minimize their size. A risk management program to address fidelity loss exposures must incorporate both risk control and risk-financing techniques. Controlling Criminal Loss Exposure 1161117 (2).pptx from FI 442 at University of Alabama. Effective risk management calls for combining risk control techniques with risk financing techniques for each significant loss exposure an organization may face. Silent cyber a big issue, most companies with insurance book have exposure: AIR Worldwide’s Stransky, More challenging environmental risks may pose insurance coverage issues for Canadian companies: Marsh, Global cyber attacks expected to up demand for related insurance, U.S. market could grow 10-fold: Fitch Ratings. Ø Loss Exposure Is Subject to Losses That are Definite in Time and That are Measurable: Insurer covers only those losses, which have definite time, and place of occurrence and the amount of loss must be measurable in monetary terms. The CMP will usually offer only a minimal limit of crime coverage (typically $5,000 to $50,000), which is far below the median loss amounts previously cited. The greater the trust, the greater the opportunity to commit wrongdoing. Finally the last technique in dealing with exposures the loss is to retain the risk either partially or in full. Procedural controls can also help detect crimes that have already been committed and identify the perpetrator(s). tip line numbers and instructions) should be communicated and available to external parties. Another key control is educating employees about the organization’s crime loss exposures and the measures implemented. Risk managers should conside Segregating your exposures to loss. This is whereby you transfer the risk to someone else and they provide the insurance and/or name you as an additional insured under their policy. * Effect of collusion (frequency) approximately 67% of the frauds in the 2004 study were committed by a single perpetrator. These intricacies include: control by hostile intelligence; and, constant and universal loss control efforts arising from a single hazard – the person who commits the crime (rather than an Act of God). Some usual perils include such things as fire, theft, explosion, bodily injury and property damage, termination, death, illness, disability, embezzlement, fraud, employment practices, professional liability, to name a few. 6. Non-insurance transfers. Long term and highly trusted staff are too often overlooked as posing an innocuous exposure to fidelity loss. However, it is a legal issue and is often taken to the law if the parties cannot settle the dispute by themselves. The prevention can be such things as preventing a total loss to a building by having the building completely outfitted with sprinklers. Thankfully, there’s a way to keep your brokerage and level the playing field. Normally a loss exposure type can be personnel, liability, property, or loss of income.The list of perils can be quite lengthy within each exposure. However, an organization’s crime controls (i.e. A liability loss exposure is the chance of being sued because of this injury. Physical controls include alarms, security patrols, cameras, fences and safes or vaults. Net income losses could result from having to divert time management and resources that could otherwise be used to increase market share and generate profits. You must have the appropriate policy, with the appropriate coverages, and limits high enough to take care of any exposures to loss that you may have. by Rob Bickerton, underwriter, corporate risk, The Guarantee Company of North America. The physical effects of injury through violent crime. If you have a troublesome exposure, such as a location that is uninsurable, you can eliminate that exposure by selling or getting rid of the property. Notwithstanding the impact of the actual property loss (monies misappropriated, etc. The results of the ACFE survey underscore the importance of fidelity insurance in a risk management program by demonstrating that risk control measures alone will not be sufficient. The first technique is that of avoiding or eliminating the exposure to loss in its entirety. * Effect of gender (frequency) virtually no gender difference – 53% were men. 3. Thus, you would spread out your property over multiple locations in multiple buildings and possibly in multiple cities and/or states. The selection and implementation process is dependent upon your risk tolerance, and your financial ability to fund the losses within each specific strategy. For example the sudden bursting of a water pipe that causes water damage in the insured’s bathroom is an occurrence that has definite time and place. A Human loss exposure, also called a personal loss exposure, can be defined as any condition or situation that presents the possibility of a financial loss to an individual or a family by such causes as death, sickness, injury or un-employment. A hard market. You can reduce your exposures to loss by focusing in on the perils or risk circumstances that tend to generate claims. In addition to constant vigilance, crime loss control measures include: * reducing the hostility of persons who may commit crimes against the organization, * shielding the organization’s assets and activities against hostile persons by maintaining physical, procedural and managerial barriers that reduce criminals’ opportunities. * Effect of education (severity) as the education of perpetrators rises, so to does the median loss. Indeed, crime is the only peril that is directed by human intelligence and is intentional. There are seven basic risk management techniques in dealing with exposures to loss. * Effect of collusion (severity) when more than one perpetrator was involved, the median loss more than tripled! 2. The starting point for analyzing and controlling the loss is determining the function of the key employee (or employees) and the resulting loss severity. How long Intact has been contemplating RSA acquisition, How Intact will decide what becomes of RSA Canada’s brands. 5. Personnel losses could result from loss of key employees and their contribution to the company’s income. The first element is the type of exposure that we are dealing with.