About Jared Wade

Jared Wade is a freelance writer and former editor of the Risk Management Monitor and senior editor of Risk Management magazine. You can find more of his writing at JaredWade.com.
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Do Insurers Pose Systemic Risk?

The G20 is meeting today and tomorrow and among the items of its agenda is finalizing the new, stricter capital requirements that Basel III will mandate for banks.

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And also insurers?

Perhaps, according to a new report from Bloomberg.

The Financial Stability Board and the Basel Committee on Banking Supervision are considering including insurers and clearing houses in measures to safeguard the world economy from crises at so-called systemically important financial institutions, said the people, who declined to be identified because the talks are private … “Systemic relevance does not depend on an insurer’s size, but on the nature of the business,” Allianz SE Chief Financial Officer Oliver Baete said in a conference call yesterday.

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“Defining systemic relevance by size is wrong.

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I would always be watching for weak business models as those could become systemically relevant faster than we all can imagine.”

Obviously, many insurers disagree.

“We firmly believe that insurers, if they keep to their core business, are not systemically relevant as banks are, and we are very confident that politicians will clearly see that difference,” Joerg Schneider, chief financial officer at Munich Re, the world’s biggest reinsurer, said in a conference call Nov. 9. “We regard ourselves as not systemically relevant and we are quite convinced that this is economically sound.”

What do you think?

New Zealand Earthquake Bends Train Tracks

In September, a 7.0-magnitude earthquake rocked the south island of New Zealand near Christchurch. Fortunately, there were no reported deaths and only about 100 reported injures. The insured losses have been estimated by some to have eclipsed $1 billion, however, making this very real seismic event a very real event for the insurance industry as well.

But it wasn’t just insurers that were affected.

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As you can see below, one train track was permanently altered in what looks more like a Photoshopped image or a cartoon gag than an actual photograph. Sure enough, this actually happened — although no one is sure exactly how.

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Dave Petley, blogging at the American Geophysical Union, isn’t exactly sure what caused the strange deformations, but speculates that “The compression on the very strong railway line was accommodated when a weak point was found, leading to a comparatively rapid deformation to form the main buckle on the left. This then concentrated stress on both sides of the buckle, allowing the other (right side) bends to form.”

The lesson?

Mother Nature aint nothing to mess with.

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New Zealand Earthquake

Developing Standards for The Cloud

cloud

Storing data on “The Cloud” is all the rage these days. And like any immature business technology, there is thus far not a ton of guidance for companies trying to educate themselves on the protocols, standards and best practices to follow before they make the transition from their internal servers to the cloud.

To help in this area, we just ran a feature story on the topic, highlighting the benefits (cost, speedy disaster recovery) and the risks (security, uncertain contracts with suppliers) that any risk professional should read. (Yes, I am biased … but it’s a good breakdown. You may also benefit from the advice surrounding security, customer service and integrity in “Putting Cloud Storage Providers to the Test.”)

Fortunately, however, the federal government has launched an initiative to standardize all of the key areas related to cloud computing.

The federal government’s standards organization plans to develop a roadmap for cloud computing standards and guidance, National Institute of Standards and Technology officials said Thursday during the first day of a two-day government cloud computing forum.

“Right now, when government CIOs want to go to the cloud, it’s kind of a free-for-all, and they have to think of everything themselves,” NIST director Patrick Gallagher said in a brief interview. “We want to help provide a structure.”

Developing a roadmap, officials said, will help prioritize standards efforts, looking to remove perceived barriers to cloud adoption around security, interoperability, portability and reliability.

NIST’s Strategic Cloud Computing initiative will not solve all of risk managers’ problems. Each still has to do his or her homework to determine whether or not the concerns outweigh the benefits for the organization.

But this is a good start and should help.

The Risks of Social Media: Planning to Fire Someone for a Facebook Post? You Better Think Twice

The more Facebook has risen in popularity — culminating in it reaching 500 million followers last June and its Hollywood creation tale The Social Network becoming the number-one movie in America in October — the more legal issues have surfaced. The most high-profile have been the near-constant privacy complaints against the company, which has a history of introducing new, unpopular features that people must opt-out of if they don’t want to submit to rather than opt-in to access.

For outside companies, however, perhaps no legal issue has been more contentious than the issue of firing an employee for something they posted on Facebook. It might be due to a salacious photo or an off-color remark about the business — and it might even have been done on the employee’s personal time — but time and time again, companies have fired workers for “inappropriate” behavior online.

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Well, based on a National Labor Relations Board (NLRB) ruling last week, we might be seeing a lot fewer of these incidents in the future.

In what labor officials and lawyers view as a ground-breaking case involving workers and social media, the National Labor Relations Board has accused a company of illegally firing an employee after she criticized her supervisor on her Facebook page.

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This is the first case in which the labor board has stepped in to argue that workers’ criticisms of their bosses or companies on a social networking site are generally a protected activity and that employers would be violating the law by punishing workers for such statements.

In what labor officials and lawyers view as a ground-breaking case involving workers and social media, the National Labor Relations Board has accused a company of illegally firing an employee after she criticized her supervisor on her Facebook page.

This is the first case in which the labor board has stepped in to argue that workers’ criticisms of their bosses or companies on a social networking site are generally a protected activity and that employers would be violating the law by punishing workers for such statements.

This specific case deals with a Connecticut ambulance company that fired an EMT, who belonged to a union, for criticizing a supervisor. The company termed the violation as “negative personal attacks against a co-worker posted publicly on Facebook” — something that went well beyond the company’s ban on depicting the company “in any way” on social networks.

Ultimately, however, the legal issue comes down to whether or not what the EMT posted was a protected worker right. Given the fact that a union is involved, those rights are already more clearly defined than they might be otherwise.

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And in the opinion of the NLRB, this was a clearly protected right.

Lafe Solomon, the board’s acting general counsel, said, “This is a fairly straightforward case under the National Labor Relations Act — whether it takes place on Facebook or at the water cooler, it was employees talking jointly about working conditions, in this case about their supervisor, and they have a right to do that.”

That act gives workers a federally protected right to form unions, and it prohibits employers from punishing workers — whether union or nonunion — for discussing working conditions or unionization

The ambulance company, naturally, disagrees with this assessment.

Regardless of the details of this case, however, there are obviously still many things that an employee could do on Facebook that would merit termination.

(Off the top of my head, some behaviors would likely include libel, harassment and violent threats, among others). And those without union protection are likely going to have a harder time at receiving re-instatement or fair compensation for unwarranted termination.

But this case, which will go in front of a judge on January 25, will help demarcate the standards that companies must adhere to in cases where the egregiousness of the comments is more murky than blatant libel or harassment. And the likely outcome is that many companies will have to re-evaluate their social media policies to determine if their bans on discussing the company in any way on social networks are overly broad.

For a look back at some of the most high-profile firings over Facebook, check out The Huffington Post’s “Fired Over Facebook: 13 Posts That Got People CANNED.”