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.

Risk Management Links of the Day: 12.17.09

credit suisse sanctions 536 million

  • Forbes published a good piece on how Credit Suisse has aided clients from rogue nations like Iran, Cuba, Burma and Libya sidestep U.S. sanctions for nearly a quarter century, an infraction that will cost the Zurich bank $536 million for violating the the International Emergency Economic Powers Act as well as New York State law. “Credit Suisse first started dealing with rogue regimes that were sanctioned by the U.S. government in 1986, when the Zurich-based bank began to assist Libyan customers in evading sanctions by executing payment orders without stating their names, according to U.S. authorities. Later Credit Suisse started to refine its methods, processing payments for clients in sanctioned countries with payment messages that concealed the identity of customers by using false codes. Credit Suisse did this kind of business for other clients in countries that faced U.S. sanctions, including Sudan, Libya, Burma, Cuba, and Charles Taylor’s Liberia, the Treasury Department says.”
  • The SEC approves enhanced disclosure about risk, compensation and corporate governance. “The Securities and Exchange Commission today approved rules to enhance the information provided to shareholders so they are better able to evaluate the leadership of public companies. Beginning in the upcoming annual reporting and proxy season, the new rules will improve corporate disclosure regarding risk, compensation and corporate governance matters when voting decisions are made.”
  • RSA Insurance Group and the WWF (the environmental group, not the wrestling association that was renamed the WWE) began a three-year partnership that will center on conducting joint research efforts into all things Mother Nature and risky.
  • The percentage of commercial insurance buyers who have an exposure insured with Chartis has dropped from 90% in July to 80% now. Still a high number, but a significant drop. Although Barclays is saying that most of those who are still on board with the AIG insurance arm now plan to stay. “Of commercial buyers that insure with Chartis, Barclays said roughly 75% of those customers plan to stay with the unit despite AIG’s troubles, up sharply from 40% of customers who said they would stay with Chartis in July.”
  • A guy named TJ Sullivan who is CEO of CampusSpeak, Inc. has dubbed the crackdown on Greek life shenanigans on campus as “the risk management era.” He explains in more detail: “The emphasis was on rules and policy adherence. It dominated everything: chapter services strategies, fraternity education, volunteer training and duties, consultant training, board meetings, etc. Someone a lot smarter than I will write a book about this, and I’m sure opinions will vary on whether or not it was a good, important era, or a harmful one. Was there any net benefit? Some will say that fraternities and sororities grew stronger during this time. The values congruence crowd will continue to crow about how risk management draws us closer to the values we were founded upon (a weak argument, I’d say). Others will say fraternities and sororities lost their fun, their innocence, and their relevance. One thing for sure, lawyers and insurance agents made a lot of money. Yet, students are still dying from alcohol poisoning and hazing on a regular basis.”
  • A new Swiss Re Sigma study analyzes commercial liability insurance. “Emerging risks due to technological and social developments are a constant challenge: new insights into and changing standards around food safety, environmental pollution, employment practices and the compensation of financial loss are, for example, risks that insurers closely monitor. Roman Lechner, co-author of the sigma study, said: “Fortunately, none of these emerging risks has evolved into the next asbestos — yet.”

UPDATE:

  • MF Global was fined $10 million by the Commodity Futures Trading Commission for three risk management failures related to supervision. “The $10 million penalty imposed by the Commodity Futures Trading Commission is the latest fallout from rogue wheat-futures trades in 2008 that forced the company to take a $141.5 million charge, triggering a restructuring that led to the departure of its chief executive, Kevin Davis.”
  • In his latest View from the Press Box, Sam Friedman gives us some 20/20 hindsight on his previous predictions for 2009. “Way back on Jan. 5, I peered into my crystal ball for the likely Top-10 Property and Casualty Insurance Stories of 2009. Before I reveal what turned out to be my actual picks here on Dec. 21, let’s see how accurate my predictions were.”

Find an interesting link? Email me any stories, videos or images you come across and would like to see included. Or just follow me on Twitter @RiskMgmt and pass it along that way.

All I Want For Christmas Is a Reputation Boost

This may make me come of as me being overly cynical (which I often am) — and I certainly don’t want to discount the generosity and clear public good that is being done here — but the holiday season has long been a time when companies try to earn goodwill for themselves by doing good will for others. What I mean is that, given the spirit of season and the fact that everyone is in such a positive mindset, many companies see this time of year as the perfect opportunity to get people to view their brand as less of a monolithic, heartless, cash-grab concealed in a logo.

‘Tis the season to convince people you are not Ebenezer Scrooge — at least not all the time.
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Citigroup, one of many financial firms that most consumers would give nothing but coal this December 25, has captured the Christmas spirit better than any other company that I’ve seen by halting all home foreclosures and evictions for the next 30 days. While many companies use the holidays to give away relatively cheap goods or even make worthwhile monetary donations to good causes, the act of easing the pain of families who have suffered the most from the global recession is perhaps the best thing any company could do — even if it is admittedly only a temporary respite for evictions that both homeowners and the bank hopes can be avoided.

The suspension means Citi will halt foreclosure sales and stop evicting homeowners from properties it has already seized. The company projects it will help 2,000 homeowners with scheduled foreclosure sales and another 2,000 that were due to receive foreclosure notices.

Das also said the company is working on “some long-term fundamental alternatives” to foreclosure, but declined to be specific.

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“We know that moratoriums are not permanent solutions,” he said.

Google, on the other hand, is gifting convenience and service to the masses in a way only it can by offering free wi-fi at 54 airports across the U.S. (and on all Virgin America planes) from now through January 15. The stated goal here is allowing people to better stay in touch with loved ones while they travel, but the real purpose seems to be the one operating goal that drives all of Google’s ability to generate revenue: Making people think it’s awesome. Well, mission accomplished, Googleplex.

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(And in genuinely charitable news, the “Search/Email/News Aggregation/Video/Web Browser/Advertising/Map Provider/Whatever Google Wave Is Giant” is also encouraging fliers who take advantage of the access to donate to any of the nonprofits on this list and pledging to match all donations.)

KPMG is one of many companies forgoing Christmas parties this year and instead finding other ways to corporately celebrate the holidays.

At consulting firm KPMG, thousands of employees spent time last week putting together gift packs of a book and a teddy bear, dressed in a KPMG T-shirt, to be sent to needy children.

Bruce Pfau, KPMG’s vice chair for human resources, said the usual holiday parties didn’t seem right this year.

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“With more and more people seeing the negative effects of the economy, we really thought that it would be more in the spirit of the holidays and a more satisfying experience for our people if we did something that was more focused on community service,” he said.

And then you go out and tell MSNBC and the Washington Post and the Kansas City Star and Fox New York all about what a satisfying experience your community service efforts were, right?

Still, these companies are obviously doing some real good in the world and that is indeed commendable. But, ultimately, let’s not forget that the actual reason many of them are doing it often has less to do with the spirit of giving and more to do with the spirit of positive press generation.

A letter to Father Christmas

Risk Management Links of the Day: 12.16.09

janet napolitano DHS

  • Department of Homeland Security Fail: “Tahaya Buchanan, an American fugitive who’d been on the run for more than two years, dodging a national arrest warrant for insurance fraud, has spent her years underground gainfully employed by the Department of Homeland Security.
  • Our homeland security watchdog is doing something right, however, as DHS Secretary Janet Napolitano yesterday announced a “first of its kind federal-state cybersecurity partnership” between the department and the state of Michigan. As someone who reads dozens of horrible press releases every day, I can assure you that this is one of the least informative press releases ever written (and, not for nothing, DHS could probably use some proofreaders), but the gist of this thing seems to center around some sort of collaborative IT system to uncover malware and cyberattacks — or something.
  • With the financial collapse bankrupting Iceland and putting once-low-risk economies like those of Greece and Latvia on the ropes, Ellen Brown looks at how even the developed world nations of the EU are now bucking IMF debt-repayment protocols. And as former fat cats like Dubai have shown, today’s global climate means that even formerly nonvolatile nations need to be given more scrutiny when it comes to credit risks. “Dozens of countries have defaulted on their debts in recent decades, the most recent being Dubai, which declared a debt moratorium on November 26, 2009. If the once lavishly-rich Arab emirate can default, more desperate countries can; and when the alternative is to destroy the local economy, it is hard to argue that they shouldn’t.”
  • The video streaming site Justin.tv is under scrutiny for its inability to prevent its users from illegally uploading copyrighted content. Ultimately, this is the same fight that has been going on regarding digital intellectual property since Napster and, later, Kazaa gave rise to widespread music piracy across college campuses in the late 90s. YouTube faced similar scrutiny and many lawsuits and, like Napster, has used the “we’re not doing anything wrong — it’s our users” defense. But where Napster (and other, more brazen sharing sites like The Pirate Bay) failed, sites like YouTube have (thus far) been able to sidestep major legal recourse by having procedures (which, if we’re being honest, are only minimally effective) that ensure the removal of content if it is reported as infringing copyright. Getting back to the main story…Now under the threat of legal action, Justin.tv told its side of the story in front of the House Judiciary Committee this morning. “Justin.tv calls on the Digital Millennium Copyright Act, which they claim should provide them with a safe harbor for copyright-infringing content that appears on the website before they or the appropriate right owners get a chance to remove it … The startup states that it aims to bring live video into the mainstream much like Flickr, The Huffington Post and YouTube have done for online images, news and video clips. The question is: are they really doing everything they can to fight piracy?”

Find an interesting link? Email me any stories, videos or images you come across and would like to see included. Or just follow me on Twitter @RiskMgmt and pass it along that way.

Mega Disasters: The Yellowstone Supervolcano

There once was a glorious period of time after the History Channel stopped being “Hitler Central” but before it became the “Conspiracy Theory Broadcasting Network” when the channel played almost nothing but great programming. Whether it was a Band of Brothers marathon or that How the Earth Was Made documentary that I’ve watched like 12 times, you could generally tune in to History at any time night or day and find something great to watch.

Perhaps the greatest of these great shows was Mega Disasters. And, unquestionably, the greatest episode of Mega Disasters was the one that detailed the literal doomsday scenario of an eruption of the “supervolcano” lurking — for now — dormant beneath Yellowstone National Park.

The most recent eruption of the Yellowstone Caldera came 640,000 years ago and, according to these scientists, on that day “there would have been hundreds to thousands of earthquakes” as “a million tons of molten rock heated to 1800 degrees fahrenheit rushed to the surface.” In other words, that would have been the wrong day to go see Old Faithful. Or, really, just the wrong day to be a human being on planet Earth at all for that matter.

Anyway, the only reason I bring this up now is because I just happened to run across the episode in full on YouTube. If you haven’t seen it, do yourself a favor. It’s tremendous.

And way better, scarier and better directed than 2012.

Yellowstone Supervolcano: Part 1

Yellowstone Supervolcano: Part 2

Yellowstone Supervolcano: Part 3

Yellowstone Supervolcano: Part 4

Yellowstone Supervolcano: Part 5