Food For Thought Friday: Employee Retention and Attracting New Talent

Our hopes with this Friday post is to tantalize a different aspect of our business brains! We’re pulling together a few interesting pointers on employee retention and attracting new talent.

Small businesses continue struggling to retain and attract team members. Did COVID really unleash a population of, “I don’t really want to work!”? Quite possibly, but here are some thoughts on how to incentivize your assets, your work force.

One size NEVER fits all, tailor benefits offerings in a way that attracts and retains the best employees. Start this process is by surveying existing and potential employees. Ask your team what types of benefits would interest them the most. Use this data to make better benefits decisions. Business owners put substantial energy and time into these plans, why not create Boutique Style and customize a plan that excites your employees!

While each workforce will have unique needs and interests, there are some commonalities seen among small business employees. Here are six of the most popular benefits that small businesses are using to attract and retain employees.

First Up is the dreaded but, “Oh So Necessary” Health Care Coverage. Good health coverage is important but also expensive! This will likely be an important benefit to your employees with families or those further along in their years of experience. Some employees need a plan to cover same sex spouses. Consider doubling down on health coverage rather than picking up expenses for ancillary benefits that may not be of interest to the majority of your team. Going to work every day knowing that your employer cares about your health and the health of those important to you could be a game changer in the candidate pool.

Leave benefits vary by workplace, but typically include paid time off (PTO), vacation days and sick time. These types of leave usually come with specific use requirements. For employers looking to attract and retain employees, expanding these benefits could be a great leverage tool. This may include allowing faster PTO accrual, providing more sick days or allowing for flexible scheduling. Implement a remote work policy for those employees that can handle it. Let them know that they have earned your trust and are valued enough to allow them to work efficiently and effectively at home.

The third incentive on our list is the always exciting, Performance Bonus. Employees want to be recognized for their hard work. Failing to do so can lower morale and affect retention. Introducing performance bonuses as an employee benefit can be a way to combat this. Performance bonuses will vary, but the general idea is to compensate employees in some way for a job well done. How this looks in practice will depend on the employer. For instance, employees might receive incentives such as gift cards, cash, additional PTO or other perks, depending on their achievement. However, before implementing such bonuses, employers should ensure compliance with any applicable workplace laws regarding employee compensation.

Financial security is very important to employees, and that sentiment grows as employees near retirement age. It’s also top of mind for those struggling financially thanks to the COVID-19 pandemic. Employees invest their time and energy into their work. As a tradeoff, many employees want their employers to invest in their retirements in return for years of service. Offering a 401(k) with contribution matching can be a powerful attraction and retention tool, as it demonstrates an employer’s investment in their workers in the long term. 

Surveys suggest employees have been putting off job changes during the COVID-19 pandemic, meaning a wave of turnover may be coming soon. Employers may want to think proactively about ways to keep employees around. In other words, when it comes to top performers, employers should be reluctant to let these employees go. That’s where professional development comes in. YES! Some employees are driven by more than just compensation! Generally, this involves cross-training employees on other positions or otherwise preparing them to take on additional responsibilities. This helps provide the employee with more growth opportunities while still keeping them within the business. Offering such development opportunities also signals to prospective employees that a workplace has upward mobility and is willing to help workers along with their career goals—two factors that can weigh heavily in recruiting conversations. This one will actually work well for your business; cross-training provides security in your foundation and non reliance on any one individual for any one function.

Last up! Wellness is a hot topic these days, and employees are looking more and more for employers who take wellness seriously. This can be especially true in the wake of the COVID-19 pandemic, where health consequences are interwoven with everyday decisions. In fact, through the lens of the pandemic, ignoring wellness initiatives may be interpreted as ignoring overall health—something employers obviously want to avoid.  

Different workplaces will offer different wellness benefits, but the purpose of any of them is generally to increase employees’ overall well-being. For instance, benefits may include mental health counseling, healthy breakroom snacks, gym memberships, fitness trackers, yoga sessions or other perks. When it comes down to it, employees want to feel like their employers care about them as individuals. This means prioritizing well-being.

Remember, you do not need to implement all of these suggestions. Survey your team, understand what is important to them, contact your benefits provider or PEO and start customizing your benefits package.

Thinking about a PEO and how your small business can benefit, Libertate Insurance can help.

White House Issues Ransomware Prevention Guidance to Businesses

In a recent letter addressed to corporate executives and business leaders, the White House emphasized that
bolstering the nation’s resilience against cyberattacks is a main priority for President Joe Biden’s administration.
Specifically, as ransomware attacks continue to rise in both cost and frequency throughout the country, the
federal government is urging businesses to take this evolving cyber threat seriously.

These attacks—which entail a cybercriminal deploying malicious software to compromise a business’s network or
sensitive data and demand a large payment be made before restoring this technology or information—have
quickly become a growing concern across industry lines. In fact, the latest research provides that ransomware
attacks have increased by nearly 150% in the past year alone, with the median ransom payment demand
totaling $178,000 and the average overall loss from such an attack exceeding $1 million.

While the White House has begun working with both domestic and international partners on various strategies to
prevent ransomware attacks, the Biden administration is also encouraging businesses to play their part in
minimizing this rising cyber concern. Rather than viewing ransomware attacks as a minor cyber risk, the federal
government is instructing businesses to view these attacks as a significant exposure—one with the potential to
wreak havoc on their key operations.

As such, the Biden administration is recommending that businesses convene with their senior leadership teams
to review their ransomware exposures and implement these top cybersecurity measures:


  • Utilize the federal government’s best practices. Businesses should be sure to incorporate the best
    practices outlined in the Biden administration’s Executive Order on Improving the Nation’s Cybersecurity. This
    includes the following practices:
    o Implementing multi-factor (MFT) authentication on all workplace technology
    o Leveraging endpoint detection and response tools to identify and deter suspicious network activity
    o Encrypting sensitive data to make it less accessible to cybercriminals
    o Developing a trusted and skilled workplace cybersecurity team
  • Ensure an effective incident response plan. All businesses should have cyber incident response plans in
    place. These plans outline proper response protocols and offer steps for minimizing potential damages during
    cyberattacks. Businesses should make sure to include several ransomware attack scenarios within their
    response plans and routinely test these scenarios with their cybersecurity teams. Based on test results,
    businesses should revise their response plans accordingly.
  • Conduct frequent data backups. In addition to the federal government’s best practices, businesses should
    also prioritize securely backing up all sensitive data, images and other important files on a regular basis.
    Conducting such backups can help businesses remain operational and continue to access crucial data in the
    event that any workplace technology is compromised in a ransomware attack. Data backups should remain
    offline (not connected to key business networks) and be routinely tested.
  • Keep critical networks separated. In order to keep ransomware attacks from fully disrupting their operations, businesses should attempt to segment their various workplace networks (e.g., sales production, and corporate) from one another rather than having a unified network. Access to each network should be restricted to those who use them to conduct their job tasks. Networks should only allow internet access as needed. That way, businesses can avoid becoming completely compromised by single-network ransomware attacks and continue performing critical functions.

  • Maintain updated security software. To help safeguard workplace technology from ransomware threats,
    businesses should equip their systems and devices with adequate security software—such as antivirus
    programs, firmware protections and firewalls. Further, this software must be regularly updated to remain
    effective. That being said, businesses should also consider utilizing centralized patch management systems to
    keep security software on a consistent update schedule.
  • Review workplace cyber security protocols. Apart from testing their response plans, businesses should
    also regularly assess whether their existing workplace cybersecurity policies, procedures and software are
    sufficient in protecting against current risks—such as ransomware threats. In particular, businesses should
    consider using a third-party penetration tester to review their ransomware defense tactics and overall
    cybersecurity capabilities. Businesses should work with their trusted cybersecurity teams and IT experts to
    make workplace adjustments as needed (e.g., updating policies or purchasing new security software).

For additional risk management guidance and insurance solutions email me James Buscarini, PCA at jbuscarini@libertateins.com or call me at 813.367.7574.

Disciplining or Terminating Employees With Open Workers’ Compensation Claims

Can an employer discipline or terminate an employee who has an open workers’ compensation claim? This is a common question that many employers ask. The answer depends on which state the company is located in, why the employee is being disciplined or terminated and the nature of the workers’ compensation claim. Let’s look at an example.

Say an employee is insubordinate to their supervisor, and this issue has occurred more than once. While the employee has been reprimanded, they continue to disobey company policies or procedures. However, the employee has an open workers’ compensation claim from an occupational injury. As a result, the employer may question whether they can continue to discipline or terminate the employee due to poor behavior.

Review this article to learn more about when an employer can discipline or terminate employees with open workers’ compensation claims.

What Is an Open Workers’ Compensation Claim?

In general, an open workers’ compensation claim can mean that an occupational injury or illness is currently being treated, benefits are still being paid, rehabilitation is in process or the employee has not yet reached maximum medical improvement.

Workers’ compensation claims can stay open for several years, depending on how severe the injury or illness was and what the treatment for that ailment entails.  

If an employee’s claim is still open, this generally means that the claim is still active in the workers’ compensation system.

When Can an Employer Discipline or Terminate?

While employers cannot retaliate against their employees for filing workers’ compensation claims, this does not mean that they are unable to discipline or terminate an employee who has an open claim. There are various reasons as to why an employer could discipline or terminate an employee. For example, an employer could potentially be permitted to discipline or terminate an employee with an open workers’ compensation claim in these circumstances:

  • After obtaining permanent restrictions, the employee can no longer complete the job tasks that were initially assigned to them.
  • Company-wide layoffs are necessary.
  • Leading up to their injury or illness, the employee had poor work performance, and this issue was properly documented.

However, it’s important to remember that employers must have detailed documentation and be consistent in their practices with all employees. In addition, employers must ensure that they are not violating any other laws when disciplining or terminating an employee. After all, just because there is no issue with workers’ compensation laws, does not mean there won’t be any compliance concerns related to disability regulations or other fair employment standards.

Documentation Is Key

In most states, it’s illegal to discipline or terminate an employee because the employee filed a workers’ compensation claim. This is considered retaliation, and employees are protected from this practice under workers’ compensation laws. By terminating an employee for filing a workers’ compensation claim, an employer could open themselves up to serious litigation issues. Employers can end up paying significant compensatory and punitive damages for retaliation claims.

But what happens when an employee’s behavior or attitude creates work performance issues? For example, an employee may fail to complete assigned work within the required time, be insubordinate to a supervisor or show up late to work—thus showcasing a poor work performance. As soon as these issues occur, the employer should start documenting them. This provides a foundation for the employer, helping them justify disciplinary action or termination—even if the employee has an open workers’ compensation claim.

However, suppose an employer only starts documenting issues after an employee makes a workers’ compensation claim, even though the behavior had already been occurring before the claim happened. In that case, it could seem as though the behavior became a problem only because of the workers’ compensation claim.

If an employee’s performance issues began after an injury or illness and during the open workers’ compensation claim, it should be noted in the employee’s personnel file with detailed notes. From there, the employer should complete a full investigation into what occurred. This way, the employer will have sufficient documentation in the event that the employee files a lawsuit against them for being disciplined or terminated during the course of an open claim.

Employers should also be consistent in their disciplinary and termination practices. If there’s no consistency, discrimination or wrongful termination claims could arise against the employer. It’s important that—when an employer is considering whether to discipline or terminate an employee—they follow these measures:

  • Document the employee’s misconduct.
  • Thoroughly investigate the misconduct.
  • Obtain witness statements (if applicable).
  • Record any disciplinary actions that the employee received, or provide reasons as to why no discipline was required.
  • Record the reason for the employee’s termination (including any documentation regarding a probationary period).

Documenting the situation with very detailed notes could help an employer defend themselves against any wrongful termination or discrimination claims that may occur.

Is it Retaliation?

Employer actions that could potentially be deemed unlawful retaliation when made against an employee with an open workers’ compensation claim include:

  • Changing the employee’s job tasks, even though the employee is still able to perform them
  • Changing the employee’s work schedule
  • Demoting the employee
  • Reducing the employee’s hours

If an employer is deemed to have wrongfully retaliated against an employee, they can be liable for various penalties, such as fines or—in severe cases—jail time.

What Happens to the Workers’ Compensation Claim if the Employee Is Terminated?

If an employee who has an open workers’ compensation claim is terminated, the claim will continue to stay open. The employer will still be responsible for the coverage of the employee’s occupational injury or illness—unless the insurance carrier, a state agency or a court determines otherwise.

It is usually in an employer’s best interest to keep an employee who has an open claim working. Doing so allows the employer to directly communicate with the employee, closely monitor the employee’s medical treatment progress and have more input as to what the employee is doing in recovery.

Employees who have been terminated, on the other hand, tend to be very hard to reach—which makes the employer’s task of following up with them that much more complicated. What’s more, an employer does not have the same kind of direct access to a terminated employee as they would have to an employee who continues working. This access can be helpful for monitoring the employee’s healing process and holding the employee accountable for following proper medical restrictions. If an employee is terminated and then hired by another company, it will become extremely difficult to make sure the employee follows their restrictions.

In any case, employers need to weigh the pros and cons of termination versus keeping an employee working. For instance, not terminating an insubordinate employee simply because they have an open workers’ compensation claim may end up being costlier than any potential retaliation claim that the employer could otherwise face for the termination itself. Each situation is different, but employers should always keep in mind that consistency is key when determining what kind of circumstances or employee actions may warrant termination.

Contact us today with any questions about workers’ compensation insurance.

California Senate Rejects Workers’ Compensation Proposal

Close one!

SACRAMENTO, Calif. (AP) — The California Senate on Thursday rejected a bill aimed at making it easier for health care employees to have hospitals pay their medical bills related to COVID-19 and other diseases that may have been contracted on the job — a move business groups said would have cost them too much money.

Companies pay their workers’ medical bills if they get sick or injured while on the job. In some cases, workers must prove their injury or illness is work-related to get the benefits. Last year, the California Legislature passed a law that assumed COVID-19 was work-related, shifting the burden to employers to prove it wasn’t.

Photo by Hush Naidoo on Unsplash

That law is scheduled to expire in 2023. A bill by Sen. Dave Cortese, a Democrat from San Jose, would have made it permanent. It would have also added other presumptions to the workers’ compensation law for hospital workers, including cancer under some circumstances, post traumatic stress disorder, certain respiratory diseases and muscle or ligament injuries.

The bill had to pass the Senate by Friday to have a chance at becoming law this year. But it fell short on Thursday before the Senate adjourned for the week. Lawmakers are not meeting Friday.

Cortese on Thursday agreed to change the bill to remove respiratory illnesses such as asthma and chronic obstructive pulmonary disease (COPD). But it wasn’t enough to get the bill passed.

Cortese said his goal was to give hospital workers, of whom he says 90% are women, the same protections as other medical professions, including emergency medical technicians.

“It really comes down to equal work, equal compensation,” he said.

Business groups, led by the California Chamber of Commerce, opposed the bill, labeling it a “job killer.”

“Such a drastic shift in the law will create an astronomical financial burden on healthcare employers and the system, creating an appreciable pact on the cost of healthcare at a time when we are trying to make healthcare more affordable,” Ashley Hoffman, policy advocate for the California Chamber of Commerce, wrote in a letter to lawmakers that was signed by 35 other groups.

The bill is part of a broader discussion in California about which coronavirus modifications should continue. Gov. Gavin Newsom said he will lift most of the state’s coronavirus rules on June 15.

The state Senate passed a bill earlier this week that would let restaurants continue to serve alcohol outside. The state Assembly passed a bill that would require local governments to keep letting people comment during their meetings by telephone or the internet. Both bills still must pass the other legislative chamber and be signed by the governor before becoming law.

Written by Adam Beam, Associated Press (June 3, 2021)

https://www.westport-news.com/news/article/California-Senate-rejects-workers-compensation-16223712.php

Moody’s Says COVID Impact on Insurance was ‘Moderate’

Moody’s opinion echos that of NCCI regarding the impact of COVID on the Workers’ Compensation system. More rate decreases to come???

Neither COVID-19 nor legislation enacted because of it has seriously harmed the creditworthiness of the property and casualty insurance sector, according to a report released by Moody’s Investors Service on Friday.

Businesses have filed about 1,700 business-interruption claims because of COVID-19 shutdowns, but those cases are largely being decided in favor of insurers, Moody’s said.

“US property policies typically require direct physical loss or damage to the property for business interruption losses to be compensated,” Moody’s said. “Moreover, most policies specifically exclude coverage for losses caused by a virus or communicable disease.”

But the battle for coverage, of course, is far from over. Only 20% of the cases filed have been resolved so far.

“A handful of courts have recently ruled in favor of insured parties despite standard policy wordings,” the report says. “Additionally, court decisions are subject to appeal, a process that could take years to resolve.”

Moody’s says it believes that ultimately, policy provisions will limit insurers’ business-interruption losses is the United States.

Photo by Nick Fewings on Unsplash

“Nevertheless, we expect the ongoing litigation will lead to inconsistent outcomes, appeals to higher courts, elevated legal costs, and some uncertainty on this matter for the next couple of years,” the report says.

For workers’ compensation, which makes up 14% of commercial line P&C premiums, the coronavirus pandemic has had only a “moderate” impact on claim costs, the report says. Moody’s echoed a report by the National Council on Compensation Insurance released earlier this month that said total COVID-19 workers’ comp losses amounted to $260 million in the US.

“The severity of these claims was generally low with 95% of the claims less than $10,000,” Moody’s said. “With more states enacting presumption laws in 2021, insurers will see additional claims but we expect them to be moderate.”

While the passage of presumption laws led to more claims for work comp, state lawmakers also enacted laws that limit exposure for commercial liability. Moody’s said the coronavirus liability protection for businesses that was adopted by most states is a “credit positive” for insurers.

The report says eventually, government might step in to create a public-private risk sharing agreement to cover business interruptions caused by future pandemics. Moody’s said bills were introduced in a number of states last year that would have required insurers to pay COVID-19 business-interruption claims, but none passed.

“With an eye toward future pandemics, some insurers and US legislators are considering public-private risk sharing arrangements to compensate small and large businesses for business interruption caused by pandemics,” the report says. “Common elements of these proposals are that P&C insurers would administer the coverage and assume a limited portion of the risk, while the US government would assume the bulk of the risk.”

Week in Rewind <<

If you haven’t noticed our focus has been heavily weighted in the area of cyber risk! Too many of our friends and clients have been impacted lately by cyber thieves. Yes, we sell insurance, but we are passionate about the benefits of insurance. We are all about Mitigating Risk and Loss Exposure!

So How Does Cyber Insurance Actually Help?

What Does It Cover?

First thing to know here is, in most cases you can design a plan to cover your business’ specific needs. As a generalization Cyber Coverage includes the following:

  • Defense and Settlement – civil proceeding or investigation
  • Regulatory fines and penalties including forensic examination
  • Re-certification services
  • Cyber extortion
  • Ransomware
  • Website media
  • Business interruption
  • Data recovery
  • Crisis management and fraud response
    • notification to breach parties
    • call center operations
    • design and implementation of website for advising breach parties
    • credit monitoring
    • public relations
    • associated legal expenses

What It Does Not Typically Covered

  • Potential future lost profits
  • Loss of value due to theft of intellectual property
  • Improvement costs to internal systems after cyber evet
    • Your other policies may be “activated” in the event of a cyber incident, but there are likely gaps in coverage for what damages are actually covered. The industry term, “Silent Cyber” refers to cyber loss exposure not covered under traditional, non-cyber insurance policies; namely the exposure is silent.

IT Risk Management

In an effort to further educate our audience we are providing links to our previously published articles on creating a better infrastructure to avoid successful attempts.

The Wall Street Journal reported that Colonial Pipeline authorized ransom payment of $4.4 million as a result of the company not being able to quantify the magnitude of the cyberattack breach to their system and the length of time to get things up and running again. Feet held to the fire for resolve and the decryption tool provided for ransom payment did not bring full restore back to Colonial. We can all feel the impact of the Colonial hack.

CNN reports that the Justice Department indicated that 2020 was the worst year for cyber attacks with ransomware demands, on average, exceeding $100,000 but as high as tens of millions of dollars. “….A key lesson here is that while technology and automation is good, we must also have the ability to efficiently operate manually as well. Attacks will happen, but how quick can you recover and restore critical services?”, Brian Harrel, former assistant secretary for infrastructure protection at the Department of Homeland Security, as reported by CNN. Having the support of insurance coverage through a Cyber policy is definitely one way to mitigate recovery exposure, should you fall victim.

NAPEO has pre-recorded webinars and information available on Cybersecurity. For non-members, follow this link to join.

Libertate Insurance Services has access to a variety of programs for Cyber Risk Coverage. Contact us, let us help you identify your Company’s Cyber Risk and find the best placement for your needs.

5 Ways Cyber Business Interruptions Differ from Traditional Interruptions


Content taken from Andrew G. Simpson’s May 2021 article in the Insurance Journal and is a reformatted post

While a typical business interruption can often be a confusing insurance situation, the picture gets even muddier when it involves cyber coverage.

According to Chris Mortifoglio, who is a Certified Public Accountant and a Certified Fraud Examiner (CFE), understanding the “nuances and differences” of a cyber insurance business interruption exposure or claim compared to a traditional one is more important now than ever.

“I will tell you that in my experience business interruption is often the most misunderstood part of property coverage. Part of that has to do with the fact that it can be very subjective. If you have 10 accounts looking at the same set of financial data, you’ll oftentimes receive 10 different calculations or estimates of what a business interruption loss might be,” said Mortifoglio, who has been dealing with business interruption exposure assessments and claims for more than a decade as the director of forensic accounting at Procor Solutions and Consulting in New York.

A cyber business interruption risk can be difficult to estimate and manage. To further the understanding of cyber BI, Mortifoglio identified five areas where cyber BI differs from traditional BI: period of measurement; period of restoration; personnel involved; geographic constraints, and reputational risk.

1. PERIOD OF MEASUREMENT

The differences between traditional and cyber business interruption begin with the period of measurement or evaluation of lost business income, a period that typically runs shorter for cyber. The timing of a cyber incident can have a major effect on the amount of a potential loss. “Traditionally, when you have a property loss, you’re usually valuing the disruption for a period of weeks or months or years as it takes time to physically repair the property damage that was occurring,” he said. In a cyber incident, the loss may last for just a few hours or a few days. This much shorter time period requires detailed or as Mortifoglio refers to it “granular” on the impact and the disruption on a company. “This means that in order to properly evaluate cyber business interruption, you need much more granular levels of data, maybe even hourly revenue data, or certainly daily sales data, as opposed to a traditional business structure loss where, in some cases, monthly profit and loss statements are enough to evaluate the impacts of the loss,” he said. The granular data is particularly important, for example, when the business operates 24 hours a day, 7 days a week making online sales. “There may be much more greater impacts, and there may be more of a need to really drill down into the disruptions that happen at different times of the day. What happened at midnight versus what happened at 8:00 am?” he explained. When comparing traditional versus cyber BI coverage, the waiting periods following an event before coverage begins are usually different as well. The waiting period for a cyber policy is often denoted in hours, whereas a traditional policy is typically for at least a few days, although it may be written as 48 hours or 72 hours, as opposed to perhaps a 12 hour waiting period for a cyber business interruption loss.

2. PERIOD OF RESTORATION

Another difference is the period of restoration. Defining the period of restoration is very important because that drives the ultimate value of a cyber business interruption loss. The period of restoration is defined as starting on the date of loss, which is the date of physical damage, and ending on the date “when the repairs should have been completed if the insured had utilized due diligence and dispatch.” That period of time is the period of time that an insurance policy will provide coverage for any loss of business income. But determining when this period starts or ends is not always easy. “When it comes to property losses, there’s usually a very clearly defined start to that business interruption period, known as the date of loss. We can define very easily what that period of indemnity is and what a potential extended period of indemnity is because it all depends on the physical damage,” he said. If a fire, earthquake or hurricane impacts an organization, it’s not hard to define when that physical damage occurred. That is the starting point for the period of restoration. However, when it comes to cyber, “there is much less certainty, not only to when a cyber event has started, but also when a cyber event ended” including when the system was repaired and there no longer is a breach. These dates are critical to figuring out the period of time that’s going to be evaluated for a cyber business interruption loss. Mortifoglio recited some questions that come up when evaluating cyber business interruption: “When did the loss start? How do we know that it started at this point in time? Was there a full disruption for an organization or just partial. For example, was it a specific system that was impacted, an email system or an accounting system that went down? And then when did this loss end?”

3. PERSONNEL INVOLVED

So in addition to requiring more and different types of data, and presenting complexities around the period of restoration, cyber business interruption also typically calls for more personnel to become involved from an organization. Mortifoglio cited a need for personnel from the risk manager and legal counsel to financial, technology and operations officers as well as others to contribute to the assessment. First and foremost is the risk manager, the “quarterback of the insurance recovery process” who is helping to manage the actual claims process once something happens, not to mention being the purchaser of the insurance on the front end. After a loss has happened, somebody from the accounting or finance department — perhaps the CFO or the controller—should be called upon to provide the financial data required to quantify any business interruption loss. In addition, it’s important to have someone from operations to assure that the full impacts of the loss are being documented and also connected to the actual financial calculation. And there’s more. “You now have to bring in more folks from your organization to help really provide the picture in the story of what happened and help to properly and accurately quantify cyber business interruption,” Mortifoglio added. This means calling in folks from the IT team to help to identify the status of the cyber incident and define the period of indemnity and the period of restoration. “That’s going to help narrow down the exact period of time that we need to evaluate from a financial perspective to quantify the loss,” he said. Also, the chief systems or technology officer may be needed to oversee data privacy and records issues that may come up in a cyber incident. The legal department may also deal with privacy issues, general legal ramifications and coverage issues, as well as interface with outside counsel brought in to help deal with a cyber breach. “The addition to these extra personnel can add to the complexity of the process,” the Procor executive said.

4. GEOGRAPHIC CONSTRAINTS

Whereas a traditional business interruption claim may be geographically constrained, the same is not always true for cyber exposure. In a traditional scenario, the property damage is contained to either a single location or region that has been hit by a widespread catastrophe. “Think of a hurricane that hit the state of Florida, and if you’re an organization that has multiple locations there, you may have multiple instances of damage. You may have multiple locations that are being impacted,” he noted. When it comes to a cyber loss, these geographic constraints do not exist and an entire organization could be impacted around the globe at the same time. “If you are an organization with a global presence and you have systems that are connecting all of your physical locations around the globe, then a cyber incident may impact you around the globe without any sort of restraints as far as geographic regions. With traditional business interruption, organizations can mitigate their risk by spreading out their operations geographically to avoid a catastrophe, really hampering the entire organization. When it comes to a cyber loss, those types of geographic constraints no longer apply,” he said. For risk mitigation purposes, Mortifoglio stressed the importance of understanding that if a global organization is running systems used by the entire workforce, all operations around the globe can be impacted immediately. “It can make it more complex because you can’t just look at a single isolated location. You have to look at the interconnectivity of your systems to see if something were to happen to them, what would the operational impacts be on your organization? And that’s what’s going to help you evaluate the potential cyber business interruption,” he said. In short, there are no geographic constraints with cyber business interruption and therefore it is harder to mitigate.

5. REPUTATIONAL RISK

Finally, cyber BI carries with it a reputational risk that traditional property business interruption does not. When there is a traditional BI loss such as a fire at a factory, customers and the general public usually do not to have any sort of reaction. Most of the time, the general public is not even aware of the fire and here is no effect on the company’s reputation. However, if a company is hacked and customer records are stolen, Mortifoglio said this can result in a “breach of trust in the public’s eye” and the reputation of an organization can be significantly harmed, often resulting in extended financial losses. In the case of a data breach, even though the system has been repaired and the breach fixed quickly, customers may be hesitant to return to do business with the organization “until they have absolute confidence that it won’t happen again. It’s hard to determine how long that might go on.” However, the forensic specialist noted, cyber business interruption policies are building in coverage to help recover any losses tied to the transitional risks, in a way that is similar to the extended period of indemnity coverage in traditional property policies. “The thought is that once a cyber incident is repaired and a breach is fixed, there may be lingering impacts due to some reputational risk” and there should be coverage there to help capture those losses, Mortifoglio said.

“The notion of implied meaning is the root of misunderstanding.”

— Eric Parslow

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The Risk with Search Engines

It’s no secret that your technology company depends on the capabilities of your computer systems to function. You should be aware that simple actions your employees take could be putting your company’s equipment and networks at risk of cyber-crime, including cyber-attacks, cyber theft and other computer security incidents. The average cost of a single cyber-attack is incalculable—cyber-attacks can directly target finances and ruin a business’ reputation. Your business is at stake, and you should do everything you can to protect yourself.


The Risks of Web Searches

As an employer, you should educate your employees about searching for certain topics on the internet due to the risk of coming across websites encrypted with viruses or malware that could be detrimental to your computer systems. Stress that the potential for cybercrime could affect employees individually as well as the business as a whole. More than 90 percent of companies surveyed by the DOJ incurred either monetary loss, system downtime loss or both because of cybercrime, so take it upon yourself to put search engine guidelines in place.


The Web’s Most Dangerous Search Terms

Common term searches conducted online one can expose your business to the risk of cyber-crime. Encourage employees to avoid following suspicious results in search engines. Any result that promises free products or materials is suspect. The least risky search terms are usually health-related topics and searches about economic news. It is essential to remember that the number of dangerous search terms is ever changing. Hackers want to impact

the highest amount of people with the least amount of effort, so they aim for popular search terms most. Ill-intentioned hackers also adapt quickly to the fast-paced nature of the internet and the public circle, so oftentimes social or celebrity events popular at a given moment climb quickly to the top of the internet’s most dangerous search terms and are a high risk for infecting your company’s computers. According to the DOJ, industries considered a part of critical infrastructure businesses account for a


Simple actions your employees take could put your company’s equipment and networks at risk of cyber-crime, including cyber-attack, cyber theft and other computer security incidents.


disproportionate amount of computer security incidents. If your company is in any of these industries, be especially careful about internet searches to ensure computer safety and protect against potentially devastating loss, both monetary and in down time:

  • Agriculture
  • Chemical and drug manufacturing
  • Computer system design
  • Finance
  • Health care
  • Internet service providers
  • Petroleum mining and manufacturing
  • Publications/broadcasting
  • Real estate
  • Telecommunications
  • Transportation and pipelines

Take Precautions to Protect Your Business


There are examples of companies and organizations around the globe that had to shut down operations to address a large-scale virus or other malware issue. These problems can affect both large and small businesses and can cost hundreds of thousands of dollars to fix. Avoid putting yourself at risk by doing the following:

  • Enact a stricter internet use policy
  • Put more strict website blockers or filters in place
  • Educate employees about the hazards that risky search engine exploration can present

Some of these solutions may cost you in the short run but lowering your risk will ultimately save your company in potential identity fraud, monetary cyber theft or informational cyber theft in the future.