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CFOs More Confident About Risk Management

Nearly two-thirds of CFOs are more confident in their ability to manage risk, with 25% reporting an increased appetite for risk, according to a new national survey from TD Bank.

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A number of respondents said their organizations have managed risk proactively since 2008 through internal controls and procedures and increased accountability.

“What we’re seeing, both through this survey and in our interactions with clients, is a more positive outlook about the economic environment and the business opportunities coming out of the recession,” Greg Braca, executive vice president and head of corporate and specialty banking at TD Bank said in a statement. “Well over a third of the CFOs surveyed expressed that they’re more confident in the U.

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S. economy, and more than half viewed their organizations’ prospects in the same vein. CFOs feel better equipped to manage risk, which will enable them to take a more active approach to investing and expansion, even if the economy improves at a slower pace than we’d like.”

CFOs are also apprehensive about the regulatory climate, with more than a third of respondents indicating that regulation is a top concern going forward.

The survey was conducted in September and October 2013 by ORC International.

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A total of 150 executives were surveyed, half at companies with annual sales of $50 million to less than $250 million (middle-market) and half at companies with annual sales greater than $250 million (corporate).

Security a Focus after N.J. Mall Shooting

The most recent mall shooting, just a few days ago at the Garden State Plaza in N.J., again heightened the focus on risk management and security nationwide.

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Parents have trusted that malls would be safe for teenagers to meet with friends, but places for public gathering can become targets for violence. The pressure is on for organizations to examine their security measures and contingency plans.

David Boehm, with Security USA said in an interview with CBS New York that the U.S. can learn from security experts in Israel. Similar to Israel, he said, our country heading in the direction of having officers stationed at entrances and exits to malls.

In an article written for Security Management, Donald W. Story, a former police chief and director of corporate security for two major shopping center developers observed that if even one shopping center is targeted in the U.S., all malls will be seen as unsafe. The public will need to be reassured, and “for that reason, it is imperative that every mall manager begin to think about how security should respond to an attack.”

The Israeli model offers lessons for U.S. malls in contingency planning, he said, adding that shopping malls, considered “soft targets” in Israel, are monitored externally by motorized and foot patrols. Vehicles entering mall property are subject to search, as are people entering malls. To do this, officers use explosion detection technology, including bomb sniffing dogs, he said, adding that unlike many mall security guards in the U.

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S., all Israeli security are armed.

Going by the Israeli model, contingency plans should be incorporated and implemented only if a heightened security posture is needed, he said.

Good contingency plans should examine coverage of the shopping mall, access, reassignment of staff’s tasks and deliveries and contractors in case of an emergency, Story said. Preventative measures should also be in place.

Because obtaining additional security officers and relying on local police for assistance might be difficult, an option would be for security officers and other staff to work longer shifts under predetermined circumstances, Story said.

The plan should address shopping center access, under what circumstances the mall would heighten control over entry, and how this would be done. Since many malls would not have adequate staffing to monitor all entrances, for example, the plan might call for closing some entrances under an elevated threat level.

Similarly, the safety plan should determine under what conditions the use of explosive-scanning technology and/or bomb-sniffing dogs would be warranted—and how this equipment would be obtained in an emergency.

Because officers would be taken from their normal duties during an emergency, minor security tasks could instead be completed by management, operations or housekeeping staffs.

Deliveries should be restricted to specific time periods when the appropriate employees are available to verify documentation, he said. Contractors, their supplies and materials should also be checked.

Officers would need to be trained to recognize certain behaviors and intercept potential terrorists. Story said they would also need instruction on proper procedures for making these assessments without being accused of profiling.

He added that some mall properties have already taken moderate and inexpensive steps to tighten mall security. Those include fire lane parking enforcement, visible waste containers, limited and guarded access to roof hatches and closer monitoring of deliveries and contractors. The Garden State Plaza, which has been praised for its preparedness, instituted security training on Sundays when the mall is closed. Shop owners also followed protocol, locking customers inside stores for safety.

New York Institutes New Disaster Protocol for Insurers

On October 28, New York Governor Andrew Cuomo announced the establishment of a new Emergency Disaster Protocol that insurers should expect to follow in the event of a future natural disaster. The protocol was communicated to insurers in the form of a circular letter on the same day. The new protocol includes many of the same measures that were put into place following Superstorm Sandy.

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“During Superstorm Sandy these steps helped us speed up relief to New York families and businesses, and they will now become a standard part of our storm response arsenal,” said Governor Cuomo. “Insurance companies have a vital responsibility to promptly process claims for consumers hit by a natural disaster and this new emergency protocol will help make sure that they live up to that standard.”

In future natural disasters, insurers can expect the following measures, among others, to go into effect: the creation of an expedited process for temporarily licensing new claims adjusters; establishment of an online report card to hold insurance companies publicly accountable for their claims processing performance; creation of a mediation process for homeowners; and institution of a temporary moratorium on the canceling of policies in storm-stricken areas for non-payment of premiums.

“Having an emergency protocol for insurers on the shelf and ready to activate at a moment’s notice will help ensure that consumers are protected when another storm strikes,” said Benjamin M. Lawsky, New York’s superintendent of financial services. This protocol will make it crystal clear to insurers what is expected of them when responding to future natural disasters and helping families and businesses get back on their feet.

In his letter to insurers, Superintendent Lawsky did state that the measures laid out in this new protocol are not all-encompassing, but that they are those the administration would be most likely to employ, “in whole or in part,” following a future disaster in the state.

New Preliminary Cybersecurity Framework Champions Risk Management

Cybersecurity

In February, President Obama issued an executive order instructing the Commerce Department to lead a task force of security experts and industry insiders to develop a voluntary framework to reduce cyberrisk. Last week, the National Institute of Standards and Technology officially released an initial draft of the cybersecurity framework and announced a 45-day open comment period for public input.

The full Preliminary Cybersecurity Framework can be viewed here on the NIST website. After the review period and subsequent revisions, a more complete version will be released in February.

Risk management is a primary focus of the new framework, from the language used to analyze potential exposure to express endorsements in the policy itself. According to a press release, “The Preliminary Framework outlines a set of steps that can be customized to various sectors and adapted by both large and small organizations while providing a consistent approach to cybersecurity. It offers a common language and mechanism for organizations to determine and describe their current cybersecurity posture, as well as their target state for cybersecurity. The framework will help them to identify and prioritize opportunities for improvement within the context of risk management and to assess progress toward their goals.”

Under Secretary of Commerce for Standards and Technology and NIST Director Patrick Gallagher, who was tasked with overseeing development of the framework, emphasized the risk management as a critical component of strengthening national infrastructure in line with the president’s executive order. “We want to turn today’s best practices into common practices, and better equip organizations to understand that good cybersecurity risk management is good business,” Gallagher said.

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“The framework will be a living document that allows for continuous improvement as technologies and threats evolve. Industry now has the opportunity to create a more secure world by taking ownership of the framework and including cyber risks in overall risk management strategies.

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The framework outlines key functions that should organize cybersecurity activities: Identify, Protect, Detect, Respond and Recover. These functions are designed to aid the risk manager in evaluating, communicating and fortifying against cyberrisks. The document even suggests itself as a potential opportunity for risk managers to seize the opportunity to get involved in proactive cyberrisk strategy. It reads, “The functions also align with existing methodologies for incident management, and can be used to help show the impact of investments in cybersecurity.”

Authors also added the following visual to highlight the critical role of risk management at every level of suggested implementation:

Risk Management in Cybersecurity Framework

In a blog post, the White House encouraged businesses to evaluate the initial framework and their current cyberrisk position, and to consider their cyber risk appetite in the form of a projected target state for cybersecurity.