Risk Insider: Martin Frappolli

Five Essential Cyber Risk Facts

By: | January 14, 2015 • 2 min read
Martin J. Frappolli, CPCU, FIDM, AIC, is Senior Director of Knowledge Resources at The Institutes, and editor of the organization's new “Managing Cyber Risk” textbook. He can be reached at [email protected]

As businesses struggle with embarrassing data breaches, this new normal is spurring better information protection. Costly intrusions have a long-lasting effect, from customer impact to insurance claims and lawsuit exposure.

Insurance professionals need pragmatic context to prepare insureds to handle a data breach — a roadmap to understanding and mitigating cyber risk exposures.

Start with these five facts:

1. Hackers attack for any reason or no reason.

Organizations fail to manage cyber risk because they believe their data simply isn’t worth stealing. Common vandalism is a frequent reason for a cyber attack. Hackers might penetrate a company’s digital defenses solely for a thrill or ego boost.

You don’t need to have lucrative information to be a target; the only prerequisite is having data in the first place.

2. Internal users can be the weakest link.

The Hollywood version of hacking is a computer whiz sitting in a dark room, furiously typing sophisticated codes. In reality, there’s a much easier way: Ask for the passwords.

A well-known method of data theft is impersonating someone within the company who needs confidential information.

Social engineering ploys can be deceptively simple, such as contacting an employee and claiming to be from IT, then soliciting a user’s account information. Or, call the help desk, claiming to be an executive, and exploit the representative’s good nature to gain system access.

Thieves attack the weakest link; sometimes that’s not the computer, but the person sitting at it.

3. Small businesses aren’t safe.

The public is aware of breaches at big companies like Sony and Target. While attacks on smaller businesses won’t generate headlines, they can potentially be more devastating, because smaller organizations are less able to recover.

It doesn’t take a multinational crime syndicate to steal data. It can be as simple as a disgruntled employee sharing access codes online or leaking sensitive emails.

For a small business, the reputational loss from betraying customer trust can be ruinous. While smaller businesses might not be the biggest targets, they are often the most vulnerable.

4. You don’t have a choice.

Legislators reacted to expanding cyber thefts with regulations requiring organizations to better protect customer data containing personal indentifying information (PII). Congress, state legislatures, and agencies like the SEC have promulgated guidelines on how to protect PII.

Companies should not wait for the various bodies to agree on one standard — they should already be doing everything possible to manage information securely.

5. Cyber risk management is everything.

Cyber risk is not a computer issue only, or merely a customer data concern. Its impact must be evaluated from an enterprise risk management perspective. Like anything that threatens an organization’s long-term viability, cyber risk must be managed.

While a number of cyber risk policies are available, there are many non-transfer strategies for managing cyber threats.

While cyber risk is changing constantly, insurance professionals need a pragmatic perspective to cope effectively. Those who take the time to study this field will better protect their organizations and themselves while earning trust from their clients and managers.

Read all of Martin Frappolli’s Risk Insider contributions.

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]