Without risk financing, risk control techniques are not sufficient because some losses are inevitable and recovery from these losses must be financed. LIC.#0A80131 Copyright © 2020 Kompani Risk & Insurance Solutions, Inc. Professional Liability / Errors & Omissions, Professional Errors and Omissions Insurance. 2. tip line numbers and instructions) should be communicated and available to external parties. The fast pace of technology and consolidation. View Notes - 6. The list of perils can be quite lengthy within each exposure. There is no scientific formula for determining appropriate limits, but a good starting point is determining how much an employee can successfully defraud a company over a three to five year period. 1. Silent cyber a big issue, most companies with insurance book have exposure: AIR Worldwide’s Stransky, More challenging environmental risks may pose insurance coverage issues for Canadian companies: Marsh, Global cyber attacks expected to up demand for related insurance, U.S. market could grow 10-fold: Fitch Ratings. All three of these items must be in place. However, this is often a misnomer. Results of the US “2004 Report to the Nation on Occupational Fraud and Abuse” – released by the Association of Certified Fraud Examiners (ACFE) – indicate a direct correlation to the Canadian situation: * 40% of occupational fraud detections initially occurred via tip lines with 24% by internal audit, 21% by accident and 18% via internal controls. Fidelity insurance is a special subset of commercial insurance that is the most obvious tool for financing crime loss risk exposure. Perhaps most relevant for individual risk managers is the data on perpetrator characteristics. Nevertheless, this information indicates important characteristics of perpetrators. This is the most typical transfer of risk and loss is through having an insurance policy in place. Personnel losses could result from loss of key employees and their contribution to the company’s income. There is a common perception that fidelity insurance (employee dishonesty) is not required as stand- alone coverage due to the existence of crime coverage in the organization’s Commercial Mercantile Policy (CMP). Non-insurance transfers. Human and Personnel Loss Exposures. Fidelity losses result from: employee dishonesty; robbery and burglary committed on insured premises; mysterious disappearance or destruction of money and securities; off-premises hold-up and robbery; acceptance of counterfeit money and money orders; and, cheque forgery. Will Alberta move to a pure no-fault auto insurance system? The greater the trust, the greater the opportunity to commit wrongdoing. A pandemic. Crime perils have distinctive characteristics requiring special risk control measures. The difference largely thought to be due to glass ceiling effect – the effect of tenure and position comes into play – men tend to hold higher positions. Indeed, the importance of an organization’s employee participation in risk management of crime losses is integral. Physical controls include alarms, security patrols, cameras, fences and safes or vaults. You can reduce your exposure by only hiring drivers who are over 25 years age of age. These intricacies include: control by hostile intelligence; and, constant and universal loss control efforts arising from a single hazard – the person who commits the crime (rather than an Act of God). Finally, managerial controls must be in place to support the overall risk management process. An example of a common risk management procedure is requiring that every individual enter through a security sign-in area or provide individuals with passwords. In establishing fidelity insurance limits of coverage, the risk manager must consider how much could be misappropriated over an extended period of time (possibly years) – small amounts can add up. Fidelity insurance may be a key method for addressing the financing of fidelity risk exposures. Without effective risk control, risk-financing techniques typically do not constitute effective risk management. Ø Loss Exposure Is Subject to Losses That are Definite in Time and That are Measurable: Insurer covers only those losses, which have definite time, and place of occurrence and the amount of loss must be measurable in monetary terms.


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