About Emily Holbrook

Emily Holbrook is a former editor of the Risk Management Monitor and Risk Management magazine. You can read more of her writing at EmilyHolbrook.com.
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Heartland Systems Hacker Sentenced to 20 Years

Albert Gonzalez was sentenced Thursday in U.S. District Court to 20 years in prison for his role in what is known as the largest data breach incident in history. Gonzalez and his crew hacked the computers of retailers such as TJ Maxx, Office Max, DSW and Dave and Buster’s (who used Heartland Systems card processing systems), stealing more than 90 million debit and credit card numbers.

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The sentence for the largest computer-crime case ever prosecuted is the lengthiest ever imposed in the United States for hacking or identity-theft. Gonzalez was also fined ,000.

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Restitution, which will likely be in the tens of millions, was not decided Thursday.

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Before the sentence was pronounced, Gonzalez told the court he deeply regrets his crimes, and is remorseful for having taken advantage of the personal relationships he’d forged. “Particularly one I had with a central government agency … that gave me a second chance in life,” said the hacker, who had worked as a paid informant for the Secret Service. “I blame nobody but myself.”

Albert Gonzalez will spend the next several years behind bars for his role as the mastermind behind the largest computer-crime case ever prosecuted.

Albert Gonzalez will spend the next several years behind bars for his role as the mastermind behind the largest computer-crime case ever prosecuted.

No Storms But More Losses for Florida Insurers

hurricane

Central and South Florida have seen four straight hurricane-free years. With that in mind, you would think insurance companies would be operating deep in the black — raking in premiums during these storm-free times.

According to insurers’ 2009 annual reports, however, “50 out of 70 Florida-based companies posted losses on their insurance business for the year; 31 of the companies reported a drop in reserves — the money insurers set aside to pay claims.”

hese Florida-based companies, many of them small, write about 52 percent of the residential homeowners insurance in the state. The rest is written by Citizens Property Insurance, the state-run company; State Farm Florida Insurance, the largest private carrier; and several dozen companies based outside of Florida.
The dreary financial reports coincide with a push in Tallahassee to pass legislation that would free up insurance companies to raise their rates at will — as much as 5 percent initially and as much as 15 percent in the future. Right now, any rate increase requires state approval.

These Florida-based companies, many of them small, write about 52 percent of the residential homeowners insurance in the state. The rest is written by Citizens Property Insurance, the state-run company; State Farm Florida Insurance, the largest private carrier; and several dozen companies based outside of Florida.

The dreary financial reports coincide with a push in Tallahassee to pass legislation that would free up insurance companies to raise their rates at will — as much as 5 percent initially and as much as 15 percent in the future. Right now, any rate increase requires state approval.

It’s obviously a bit puzzling when you try to make sense of so many insurance companies losing money when they’re only bringing in premiums and not paying out claims. Alex Sink, the state’s chief financial officer is asking for answers from Insurance Commissioner Kevin McCarty. The status report is due Wednesday.

Florida insurers say they have been left vulnerable by a number of factors, including:

  • The state’s determination to hit the brakes on rate increases. Numerous rate hike requests have been whittled down or rejected.
  • The rise in the cost of “reinsurance” — backup insurance that companies buy to limit their exposure in the event of a disaster.
  • The state’s schedule of wind mitigation discounts, which grants major rate cuts to homeowners who buy shutters and pay for other improvements to make their homes more hurricane-ready. Companies complain the discounts are overly generous.
  • The reopening of Hurricane Wilma claims as policyholders put in for additional losses — often at the insistence of public adjusters, who represent homeowners.
  • As in the case of Southern Oak, the payment of overly generous commissions to affiliated companies that drain revenue from the insurer and leave it with little income or sometimes even losses.

As we approach the start of the 2010 hurricane season, it’s scary to think what would happen if a hurricane does in fact strike Central or South Florida. How would these insurers pay out claims?

Moves are being made in Tallahassee to remedy this problem. One such remedy is a proposed bill that would require each property insurer operating in the sunshine state to boost its reserves to $15 million — a sizable hike from the current requirement of just $4 million.

This, along with other proposed changes, will hopefully change the current state of affairs for Florida insurers. If not, the next hurricane to strike the area could leave many property owners in the dust, literally and figuratively.

Water Woes: A Toxic (and Dwindling) Water Supply

The nation’s vast network of underground water pipes is hitting its retirement, and in some areas sooner than others.

In Washington, D.C., alone, there is a water pipe break every day on average, according to a recent article in the New York Times. But it’s not just the nation’s capital that struggles with the infrastructure of a aging sewer system that was built around the time of the Civil War — cities such as Los Angeles, Indianapolis, Sacramento and many others are also facing an uphill sewer system battle.

This weekend’s heavy rains in Washington “overwhelmed the city’s system, causing untreated sewage to flow into the Potomac and Rivers.” Unfortunately, it’s not only untreated sewage that sometimes pollutes the nation’s drinking water — there’s also pharmaceuticals, lead, nickel, arsenic and a slew of other dangerous heavy metals.

In fact, the Environmental Working Group (EWG) found 315 pollutants in the tap water American’s drink.

More than half of the chemicals detected are not subject to health or safety regulations and can legally be present in any amount. The federal government does have health guidelines for others, but 49 of these contaminants have been found in one place or another at levels above those guidelines, polluting the tap water for 53.6 million Americans. The government has not set a single new drinking water standard since 2001.

In response to the government’s failure to set new safety standards and priorities for pollution prevention, the EWG launched a three-year project “to create the largest drinking water quality database in existence.” They rated water from big cities (those with a population more than 250,000) based on three factors:

(1) total number of chemicals detected since 2004
(2) percentage of chemicals found of those tested
(3) highest average level for an individual pollutant

And the group’s research found the following results, broken down here in an infographic from Good magazine (via I Love Charts):

dirtiest-municipal-water-systems

And in looking at the number of people served by this polluted water, we see that the clean water in the Boston area is enjoyed by millions while any negative health effects of the dirty water in Las Vegas could be widespread:

dirtiest_water_systems_2

But it is not only the issue of water quality that has been making headlines in recent years. Communities and corporations are using (and also wasting) massive amounts of water every year.

I tackled the topic of water scarcity for Risk Management last June:

In the United States, several of the fastest-growing cities are already struggling to manage water use. Years of drought in the Southeast have severely drained Lake Lanier, one of the largest lakes in the region and the major freshwater source for the majority of those living in the urban sprawl surrounding Atlanta. Las Vegas has long faced water shortage problems due to the fact that it is a city within a desert and years of astounding urbanization and population growth have placed unprecedented strain on the already-low water availability in the region. In California, Governor Arnold Schwarzenegger declared a state of emergency in March and threatened, not for the first time, to implement statewide water rationing.
Globally, the problem is even more dire. The world population has already surpassed 6.6 billion and is expected to reach nearly 9 billion by 2050. With this unbridled growth, demand for freshwater is increasing by 64 billion cubic meters per year, according to the United Nations Educational, Scientific and Cultural Organization. Looking back, the World Health Organization (WHO) reports that global freshwater consumption rose six-fold-more than twice the rate of population growth-between 1900 and 1995. A similar rate of increased water consumption over the next half century would be unsustainable, meaning that the current path of overuse and mismanagement cannot continue.

In the United States, several of the fastest-growing cities are already struggling to manage water use. Years of drought in the Southeast have severely drained Lake Lanier, one of the largest lakes in the region and the major freshwater source for the majority of those living in the urban sprawl surrounding Atlanta. Las Vegas has long faced water shortage problems due to the fact that it is a city within a desert and years of astounding urbanization and population growth have placed unprecedented strain on the already-low water availability in the region. In California, Governor Arnold Schwarzenegger declared a state of emergency in March and threatened, not for the first time, to implement statewide water rationing.

Globally, the problem is even more dire. The world population has already surpassed 6.6 billion and is expected to reach nearly 9 billion by 2050. With this unbridled growth, demand for freshwater is increasing by 64 billion cubic meters per year, according to the United Nations Educational, Scientific and Cultural Organization. Looking back, the World Health Organization (WHO) reports that global freshwater consumption rose six-fold-more than twice the rate of population growth-between 1900 and 1995. A similar rate of increased water consumption over the next half century would be unsustainable, meaning that the current path of overuse and mismanagement cannot continue.

Not helping the water scarcity issue are water-intensive industries such as agriculture, energy/oil, mining, food and beverage manufacturing, semiconductors and apparel. Agricultural processes alone account for a whopping 70% of all fresh water used.

This water usage has not gone unnoticed. Recent criticisms of such industries has prompted some corporations to initiate new, less water-intensive processes.

One such company is Anheuser-Busch InBev.

By the end of 2012, the company plans to whittle down its worldwide water use by 30% to 3.5 hectoliters for each hectoliter of production compared with 5.03 hectoliters in 2007. Each hectoliter is about 26.4 gallons. Water use last year was roughly 113.6 gallons, or 4.3 hectoliters, for each hectoliter of beer produced. The company’s brewery in Cartersville, Ga., has already reached the 3.1-hectoliter mark.

Reaching the goal would be the equivalent of saving enough water to fill 25,000 Olympic-size swimming pools, Anheuser-Busch InBev said. Since 2000, the brewer has already decreased water use by nearly 37%, it said.

The LA Times coverage naturally focuses on the “green” aspect, lauding the bottling company for its efforts to help Mother Nature and also discussing its plans to cut carbon dioxide emissions. But you have to think that pure altruism isn’t the sole motivation here. The company is certainly aware that, in the future, water will be a scarcer — and more expensive — commodity and is starting to adjust now by increasing its efficiency.

And Anheuser-Busch isn’t the only company working to waste less water. Texas Instruments, who, along with Intel, used more than 11 billion gallons of ultra-pure water for silicon chip production in 2007, has taken steps to reuse and recycle the vast amount of water it uses on a daily basis. But industries are still a far cry away from realizing in full the impact their water usage has on the earth.

And even if for those that do realize it, many times, revenue means more than waste.

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RiskCast: Episode 6

We’re back with another installment of the RiskCast. Listen to the staff of Risk Management magazine discuss newsworthy events. Topics covered include animal extinction, cosmic rays as the source of Toyota’s problems and the wide world of floods and flood insurance. This RiskCast is especially amusing because Editor in Chief Morgan O’Rourke is angrier than ususal.

And remember, you can also subscribe to the RiskCast through iTunes by clicking here or searching for “RiskCast” within the iTunes store. Please let us know what you think by ranking us or giving us a review on iTunes. (Past episodes are also available for you listening pleasure.)

Enjoy!

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