About Adam Jacobson

Adam Jacobson is a former associate editor of the Risk Management Monitor and Risk Management magazine.
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Venice Sees Near-Record Flooding

The city of Venice, Italy, faced the worst flooding of its famous canals since the devastating floods of 1966. Venice has suffered major economic impact from this new round of flooding, with Mayor Luigi Brugnaro predicting that the damage will cost hundreds of millions of Euros, and claiming climate change is to blame.

The recent flooding paralyzed many local businesses, forcing schools to close and disrupting the city’s bustling tourist industry. When the salt water of the canal rises, it can destroy centuries-old architecture and wipe out entire inventories.

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And since insurers have refused to provide flood coverage to Venetian businesses due to the ever-present flooding threat, costs can surge even more.

After the 1966 floods, the city began planning a sea barrier to combat the increasing flooding, called the Mose Project, but it has largely languished since then, reportedly due to corruption and delays. The barrier consists of gates that rise with the tide to prevent flooding at different inlets of the Venetian Lagoon, the bay surrounding Venice. The project has been formally underway since 2003 and has cost billions of Euros so far, with its engineers now predicting the barrier will be in place by the end of 2021, while others say 2022.

As the floods have gotten worse, Venetians have taken to the streets to protest the city’s mismanagement of flood prevention and response measures, as well as tourist cruise ships that produce waves they allege have eroded the city’s foundations. Venice has also seen a slow trickle of people leaving the city, as the constant flood risk has made life and business operation untenable for many. According to NBC News, of about 53,000 residents in the city’s center, Venice lost over 800 residents last year alone.

As with many recent extreme weather events around the world, some experts believe the floods may be the result of climate change. Environmental economist Shouro Dasgupta told NBC News that the frequency and severity of the city’s floods have increased significantly. “Since 1951 until today, we have had 21 severe flooding events,” he said.

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“Out of those 21, 13 have been since 2000 and, out of those 13, eight have been since 2012.”

The Venice city council reportedly rejected measures to combat climate change minutes before floodwaters actually reached the council chambers. Pictures of the flooded government chambers posted by city councilor Andrea Zanoni went viral—an ironic symbol of official inaction in the face of climate change’s effects. Zanoni told CNN that the council rejected measures to fund renewable energy, to make city buses (currently running on diesel) “more efficient and less polluting,” and to address the local use of polluting stoves and plastics.

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The council’s president, Roberto Ciambetti, refuted the assertion that the city’s government was ignoring climate change, citing budget provisions dedicated to fighting air pollution and smog.

Venice Flooding

Last week, the United Nation’s Environment Program released a report stating that countries must increase their carbon-cutting measures dramatically to prevent warming of 3.2 degrees Celsius by the end of the century. The report noted that the many of the world’s 20 richest countries, which are responsible for 78% of global emissions, have not committed to reducing their emissions to zero. Italy is one of the few countries that have made this commitment, albeit as a long-term target.

Americans Mistrust Companies with Personal Data, Study Shows

According to a new survey by the Pew Research Center, most Americans believe that companies are tracking their activities on and offline, and that this activity is unavoidable. Not only that, but many also believe that they have little control over who can access an array of personal details, such as their location and online activity, including purchases they have made online or in person. This mistrust, coupled with the advent of more stringent data privacy regulations, means a more complex risk landscape for businesses operating online.

While companies often market services that collect data as improving the customer experience, those users likely disagree.

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In fact, 81% of the American public believe that the risks of companies collecting their data outweigh the benefits. This may have to do with a lack of understanding of what companies do with their data—59% say “they have very little/no understanding about what companies do with the data collected.”

It may also be a perceived lack of control over how companies are collecting and using that data, with 81% saying that “they have very little/no control” over companies collecting their data, and 79% “very/somewhat concerned about how companies use the data collected.” With more online activity, 72% of respondents said that “all, almost all or most of what they do online or while using their cellphone is being tracked by advertisers, technology firms or other companies,” and 64% report seeing ads based on their personal data.

Many companies outline how they use customer data in terms of service or other privacy disclaimers—according to the survey, 81% of respondents say they are asked to agree to a privacy policy at least once a month, and 25% almost daily. However, 74% report that they sometimes or never read a company’s privacy policy before agreeing, and only 22% read the entire text if they do read it.

Pew Data Trust

Security is also a worry, with 70% reporting that they feel like their data is less secure than it was five years ago and only 6% saying it is more secure today than in the past.

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Considering the vast array of data breaches, seemingly across all industries, this is likely not surprising.

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Millions of Americans have received notices from their banks, hospitals, or even their hardware store or ride-share app that their personal data has been compromised. According to cybersecurity company Norton, the first half of 2019 saw 3,800 breaches exposing 4.1 billion records, a 54% increase from the first half of 2018.

Given these results, it is no wonder that states, countries, and regions are beginning to enact strict regulations about data privacy. The California Consumer Privacy Act (CCPA), which provides protections for the data of California residents, also exposes businesses that collect, store, use and disclose those residents’ data to serious liabilities. In response to some companies hiding breaches from the public, states are also weighing stronger breach reporting requirements with larger fines for violations. Whether these efforts will diminish user mistrust is unclear—63% said that “they understand very little or nothing at all about the laws and regulations that are currently in place to protect their data privacy.”

California Unveils New Earthquake Warning System

California governor Gavin Newsom announced a new state-wide system, created in cooperation with the U.S. Geological Survey, that will provide California residents with an early warning for coming earthquakes. Part of the system is an emergency messaging system that sends text warnings, similar to those that cell phone users already get for floods and missing persons. The other component of the system is a new app called MyShake, which will give people “tens of seconds” advance notice before a quake strikes. If you are in a house, that might be enough time to get to a safe spot away from falling furniture.

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If you are on the road, it may be enough time to pull off the road or stop before a bridge or tunnel.

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According to the California Governor’s Office of Emergency Services, “The system uses ground motion sensors from across the state to detect earthquakes before humans can feel them and will notify Californians so that they can ‘Drop, cover and hold on’ in advance of an earthquake.” A similar app called ShakeAlertLA was unveiled in January, but was only available to L.A. residents. Additionally, an early warning system had already been in place in California, but many believed that it was not sensitive enough. This summer, after two major earthquakes hit a desert area outside of Los Angeles the week of July 4th, L.A. residents complained that they had not received any warning because the quake’s distance from the city meant that it was strong enough to set off the sensors in Los Angeles.

Newsom announced the new system on the 30th anniversary of the Loma Prieta earthquake that hit San Francisco in 1989, killing 63 people and causing a reported $6 billion in 1989 dollars (more than $12 billion today) in property damage. A spokesperson for the Governor’s Office of Emergency Services said that if the new system had been in place at the time of Loma Prieta, residents would have gotten a warning 15 to 18 seconds before the earthquake hit.

Shortly after its release, two earthquakes in San Francisco tested the app and it was able to warn users within a median time of 2.1 seconds for the first quake and 1.

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6 seconds for the second. Officials said that the app will improve as it is tested further, and will also be available in Spanish and other languages in the near future, allowing it to reach more California residents.

California has a 99.7% chance of a 6.7 magnitude earthquake or larger in the next 30 years, according to Dr. William Leith of the U.S. Department of the Interior’s U.S. Geological Survey. And while the new system could protect residents from bodily harm, the same cannot be said for their property.

According to a 2018 California Department of Insurance report, only 13% of state residents with homeowner’s insurance purchased earthquake coverage in 2017. The total for all Californians is likely lower, around 10%, leaving many vulnerable to high costs for repairing and rebuilding property.

Strategies to Prevent Internal Fraud

As employees can be key perpetrators of fraud, creating and implementing best practices with regard to insiders is a key part of an enterprise’s everyday risk management procedures. For example, developing internal controls that involve multiple layers of review for financial transactions, and arranging independent reviews of the company’s financial records can prevent malfeasance, detect ongoing fraud and prevent it from continuing.

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In fact, according to Kroll’s 2019 Global Fraud and Risk Report, businesses discovered insider fraud by conducting internal audits 38% of the time, through external audits 20% of the time and from whistleblowers 11% of the time.

Technology solutions provider Column Case Investigative recently examined five common types of fraud that businesses face, including employees falsifying their timesheets to steal money from the company, taking intellectual property or passing off counterfeit items as genuine, funneling money away from vendors to themselves, or soliciting favors or compensation from clients or vendors for preferential treatment. These tactics can impact a company’s profits and expose it to possible litigation, but also pose risk to its reputation with customers and partners, as well as its competitiveness.

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To best mitigate these risks, the provider recommended that companies do their due diligence in the hiring process to detect any warning signs that applicants may have a motive to commit fraud. To limit intellectual property theft and misuse, they should limit access to important information and materials.

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Enterprises can also create clear ethical standards for employee conduct and a positive culture in which workers are happier, more committed to the company and more comfortable reporting fraud when they see or suspect it happening.

Check out the infographic below for more best practices to mitigate employee fraud risks: