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Business Continuity Awareness Week Takes On Emergency Preparedness

Resilience is constantly on the minds of risk professionals. If last year taught us anything—between ransomware attacks, natural disasters, and pandemics, just to name a few examples—it is that businesses have unlimited reasons to plan for major disruptions.

To help professionals address emergency preparedness, the Business Continuity Institute (BCI) has initiated the annual Business Continuity Awareness Week (BCAW), May 14 through May 18. The online event will feature 29 webinars tackling a variety of issues under the resiliency umbrella, including crisis leadership, workplace recovery and data breaches that will be hosted by BCI members and organizations such as Amazon and Google. Additionally, BCI will host three onsite launches for its organizational resilience manifesto in London, Toronto and Sydney.

BCI uses the global event as a vehicle to raise awareness of the profession and demonstrate the value effective business continuity management can have to organizations of all sizes. The organization is also hosting a blog writing competition and a photo face cut-out contest with Amazon vouchers for prizes.

Other resources include BC24, an interactive roleplay game where you and up to five colleagues can test your responses in an emergency and tackle the challenge of recovering after an incident. The game is designed to encourage critical thinking about the importance of decisions made in a crisis and demonstrates how these decisions can impact the wider organization. There is free access to the game for the month of May only.

In an effort to bring BCAW awareness into the workplace, BCI advises risk managers to initiate campaigns in their companies, with suggestions including:

  • Run an exercise. You can use BC24 or devise your own exercise to ensure that employees and colleagues are informed on what to do during an incident.
  • Host Q&A sessions. These can be in-person or on social media channels. Asking your staff important questions relating to your incident response strategies can help in identifying your training needs.
  • Circulate your documentation. Does your staff know where to find your business continuity plans? Why not circulate them to everyone, asking for feedback or questions.
  • Hold competitions. You put some fun into learning by holding your own contests. Devise a quiz relating to your business continuity plan, or even send staff members on a scavenger hunt for clues relating to an incident.
  • Host a webinar. BCI will host webinars throughout BCAW, however, there may be a topic relevant to your organization or discipline that it does not cover. You can contact the BCI with questions on how to host a webinar and the best ways to engage your staff.
  • Publish white papers. Every organization approaches disaster recovery in a slightly different way. You can share your analysis with staff members by publishing white papers from various disciplines. This raises awareness about resilience and helps employees understand your organization in more depth. You can email yours to BCI here, and it may publish via its news channel through BCAW.
  • Social media. Social media campaigns will be running throughout the week, asking questions about business continuity and organizational resilience. Tweet BCI at @thebceye with your BCAW activities to inspire other organizations.

Reputational Crisis Forces Cambridge Analytica’s Closure

Most of us are aware of the recent scandal involving Facebook and political consulting firm Cambridge Analytica, wherein the latter company obtained data from up to 87 million Facebook users and, in turn, built profiles of individual voters and their political preferences to best target advertising and sway voter sentiment. This information was used to enable Donald Trump’s campaign in the 2016 presidential election.

Right around that time it was reported that the Cambridge Analytica board of directors suspended CEO Alexander Nix. This action was taken after a whistleblower claimed Nix set up a “fake office” in Cambridge to present a more academic side to the company, and made comments to undercover reporters  that “do not represent the values or operations of the firm and his suspension reflects the seriousness with which we view this violation.”

A feature about the scandal in Risk Management’s current issue explains why the incident was not a data breach and how companies can learn from this and comply with EU’s General Data Protection Regulation (GDPR) in time for its May 25 implementation.

In the aftermath of the scandal and Cambridge Analytica’s concession that it will not be able to recover from its reputational crisis—although the company’s leadership maintains that it acted ethically—the UK-based firm and its affiliates announced on May 2 that it will be “ceasing all operations.” Excerpts from its statement are below:

Over the past several months, Cambridge Analytica has been the subject of numerous unfounded accusations and, despite the Company’s efforts to correct the record, has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas.    

Despite Cambridge Analytica’s unwavering confidence that its employees have acted ethically and lawfully, which view is now fully supported by [Queen’s Counsel Julian Malins] report, the siege of media coverage has driven away virtually all of the Company’s customers and suppliers. As a result, it has been determined that it is no longer viable to continue operating the business, which left Cambridge Analytica with no realistic alternative to placing the Company into administration.

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This once again demonstrates how attacks in the court of public opinion can cripple a business.

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Despite a fast reaction and being exonerated by a credible authority, no amount of crisis management and communication could make up for the actions of Cambridge Analytica’s leadership. It also seems that the company had not considered a business continuity plan for a reputation crisis of this magnitude.

Last year, Steel City Re CEO Nir Kossovsky wrote for Risk Management Monitor about reputational risk—reflecting on it and warning of the consequences to an organization. When public anger rises, he said, “more blame is being cast upon recognizable targets, such as CEOs.”

And while Facebook CEO Mark Zuckerberg seems to have dodged the bullets fired his way during a Congressional hearing last month (did you #deletefacebook?), Cambridge Analytica’s leadership knew that, based on its actions and the cavalcade of accusations, neither their clients nor the public would ever “like” them again.

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Truck Driver Shortage Impacting Shipping, Retail Prices

Factors including electronic-logging of driver hours, a growing need for shipment of items by Amazon and a surge in retirement of baby-boomers have meant a shortage of freight truck drivers and rising shipping costs.

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The American Trucking Associations reported a shortfall of 51,000 truck drivers nationwide in 2017, up from 36,500 in 2016 and 20,000 in 2013. The ATA projects the driver gap will increase to nearly 100,000 by 2021.

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“We’ve probably never had a situation like we have today, where the demand is strong and capacity is constrained,” Bob Costello, chief economist of the American Trucking Associations (ATA), a trade group representing trucking companies told USA Today. The ATA also reported that transportation companies are taking steps to attract drivers, such as pay increases and signing bonuses.

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Ben Cubitt, senior vice president of Transplace, a freight management firm noted that 99% of trucks nationwide are in use, up from 92% in October 2015. “Every truck is spoken for every day,” he said, adding that trucking companies have increased rates 6% to 10% in contracts with shippers over the past year to offset higher wages and take advantage of the strong demand. Trucks account for almost two-thirds of all tonnage moved in the U.S., according to the American Trucking Associations.

A new federal mandate for electronic logging devices that took effect in December, limiting the number of hours drivers can work, has had a big impact. These devices now take into account all time spent on the road, even waiting for cargo to be taken off a truck, which can cause hours to add up quickly and push a driver past the legal limit of consecutive work hours.

“There is a lot of uncertainty within the trucking world right now about what the effects of the [electronic logging devices] mandate’s going to be in the long term,” Steve Viscelli, a sociology professor at the University of Pennsylvania told USA Today. He added that E-commerce also has had a “huge effect.”

Price increases passed on to consumers are low so far, but are expected to increase as the driver shortage continues.

Growing Cities Mean Growing Risks

On a recent list of the fastest growing American cities, Nashville jumped from 20th to 7th in a year. There are more than 210 active construction projects in the downtown core alone. We are hardly alone. Denver, New York, Charlotte, Atlanta and more are experiencing similar growth. Cities are booming and growing, and the construction cycle is showing little sign of letting up soon.

This growth presents great opportunity for companies in the construction industry.

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While it is exciting to see many succeed and take part in skyline-changing projects, it cannot be overlooked that with growing opportunity comes growing challenges. Risk management and comprehensive protections are becoming a central component of doing business, as more activity, more competition and tougher deadlines mean that no matter how good a company is with its service, risk is increased.

A catastrophic accident or incident that isn’t properly prepared for can wipe out boom time profits for any one company. As an entity in construction and development, it is vital to be completely protected from a risk transfer standpoint.

To do that there are three things anyone in a boom time must recognize:

  1. Risk is contractually driven in the construction industry. There is no blanket standard on your risk or obligations when it comes to construction, and each contract spells out different demands.
  2. You are forced to put a lot of trust into subcontractors. No job can be completed without competent, capable subcontractor work. So, whether you are the general contractor or another subcontractor, you have to trust other entities to do their job to be certain you can do your best job.
  3. The best subcontractor teams are harder to come by. As I mentioned previously, there are 210 projects ongoing in Nashville’s urban core alone. That means subcontractors are in high demand and the team you want or typically use may not be available. That results in having to sometimes trust someone you’ve never worked with before.
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In short, risk is shifting from project to project.

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Much of the work of any project is out of the control of one company or team and the teams you work with are constantly shifting due to high demand.

That presents challenges. What’s the best singular way to address these challenges?

Don’t just leave your contract to your lawyers! Cover all the bases by allowing all involved in risk management and insurance to be engaged from the outset—starting with contract review and finalization. This is applicable to both general contract agreements as well as subcontract agreements.

Your lawyers are important when creating a legal document, but you also need to consider your insurance risk management partners as part of the contract origination team. They should have an opportunity to review your contract to make sure it is reasonable from a risk management perspective. This step opens the door for the contract to be shared with the underwriters early to get them familiar and comfortable with the parameters of the project and its risk. As a result, from day one there is an understanding of everything expected of the client, from how the contract agreement reads to transfer of risk.

For the subcontractors you use, diligence needs to happen when it comes to review of those Certificates of Insurance provided. Types of coverages, respective limits and additional protective wording should be stipulated on that Certificate of Insurance form and received as part of contract compliance and before subsequent works begins.

The good news for those in the construction industry is there is a high availability of insurance within the construction market. Insurers continue to strongly solicit construction business and are willing to provide the coverages needed—and at very competitive pricing.

Ultimately, while the right policies and the best packages are important, most of the work to ensure your protection is needed on the front end during the contract phase. Take the time to involve your risk management partners early in the contracting period and save yourself panic later.

This will not only ensure that you have the right protection in a time of increased activity and opportunity, but also mitigate the chance for gaps in coverages and ensure your insurance partner is ready to mobilize and advocate for you quickly and effectively in case there is claim.