Why your insurers and brokers may be obliged to testify against you


If any Company Directors or brokers were still in any doubt about the burden of responsibility on their shoulders this case may serve as a timely reminder that we need to ‘get beyond’ having an annual chat about general business issues, football and family before determining that their priority is to secure the cheapest terms available:

To prove that the company and its directors were on notice, the prosecution relied almost exclusively on evidence produced by the company’s brokers and insurers. Representatives from the brokers’ risk management team were called to give evidence and discuss information contained in numerous documents spanning the six-year period before the accident.

These documents included:

A pre-cover survey;

The minutes of a meeting to review the company’s health & safety policy as well as the monthly and quarterly risk management meetings;

The ongoing audits of both sites and recommendations;

The documents prepared for the insurance market to obtain cover, including one monitoring the progress of risk management.

via Why your insurers and brokers may be obliged to testify against you | Airmic.

Airmic:: ‘Black Swan’ events – avoiding extinction


Practical advice, courtesy of AIRMIC & Marsh. The article is well worth a read even though all it really does is reiterate some of the key points I have been putting across since I started my original blog in 2009!

I have selected this extract as it identifies a huge failing that “stalks” the whole financial and risk sector but about which too few are prepared (or able) to be honest and many are even less forthcoming about its impact: ASSUMPTION.

The truth is that, without a healthy dose of assumption, the basis for flawed economic theory, mathematics that is as misleading as it is elegant and the computing power to turn it all into plausible financial models, they would not find it so, relatively, straightforward to relieve the populous (directly or indirectly) of our hard earned cash to enable them to wield – and abuse – the power that it brings!

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Still subjective, still correlation but getting closer… :: Accenture identify characteristics of "The Risk Masters"


So, if reports from, the likes of AIRMIC “Roads to Ruin”, World Economic Forum/Zurich, FSA (on RBS), PwC, IBM, UK Government, Zurich and Towers Watson (to name a few recent contributors) have failed to penetrate engrained – but flawed – belief systems, it may be a forlorn hope that Accenture can succeed with this report…but, we live in hope! Hence my resolve to share this kind of useful information as widely as possible.

WEALTH WARNING: all risk management is not made equal and it should not be solely about risk…but reward!

Click to EnlargeBlack Swan resilience

More reports into the subjects of risk management, complexity and compliance can also be found here. Of the recognised Consultancy firms it certainly appears that AT Kearney have the best understanding of the subject of complexity but, unlike Ontonix, NONE, to date, have presented a, measurable, definition or means by which an organisation can begin to explore the issue themselves.

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Roads to Ruin: major corporate failures beyond the scope of risk management


I confess that I haven’t read the full report (it runs to 200 pages) but, between the report itself (link below) and the CII summary document, the message sounds eerily familiar to the voices that have been going round in my head for the last few years!!! Don’t be afraid I am not a threat!

buiding-collapseMuch of what the voices were telling me resulted from extensive research into the nature of complex systems that was prompted by the “genius” of Dr Jacek Marczyk (Founder & CTO at Ontonix). Much of what I have learnt and sought to bring to the attention of those engaged with mitigating and managing risk in insurance (and wider Financial Services) has, unsurprisingly, found its way into the pages of this very blog, numerous Linkedin Group and “real world” discussions.

Whilst my “journey” has been intellectually rewarding the same cannot be said in financial terms!

My experience is such that I don’t expect that there will be rapid and sweeping change as a result of this report. Although, bearing in mind the nature of the risk management “weaknesses” and given what we know about the societal cost of major Corporate failure, it would be perfectly reasonable to ask: why not?

It isn’t as if there haven’t been warnings. This is an extract from a report into systemic risk, prepared during 2006:

Two particularly illuminating questions about priorities in risk management emerge from the report. First, how much money is spent on studying systemic risk as compared with that spent on conventional risk management in individual firms? Second, how expensive is a systemic-risk event to a national or global economy (examples being the stock market crash of 1987, or the turmoil of 1998 associated with the Russian loan default, and the subsequent collapse of the hedge fund Long-Term Capital Management)? The answer to the first question is “comparatively very little”; to the second, “hugely expensive”.

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