Insuring Your World - Spring 2006 Vol. 17

Risk Management Essentials Risk management is critically important for both large and small businesses. In fact, small businesses can use the same loss reduction and cost control mechanisms that large companies use to save money and be more competitive. Lackner McLennan Commercial Insurance Specialists develop comprehensive plans to mitigate risk. These protect your business, your facilities, people and customers. There are many risk exposures addressed by a comprehensive risk management program. These include: Protection of Assets — The risk to physical assets such as buildings, capital, equipment, and inventory due to fire, burglary or theft can cause devastating losses. The added strain on capital if your business is unable to operate because of a loss of physical assets can be crippling. Insurance coverage for both lost assets and business interruption can be included in your program. Protection of Facilities/Premises — If your facilities are rented or leased, you could be financially responsible for damages in the event of fire, explosion, vandalism, flooding/leaks etc. If you own your business premises, you need insurance to protect both the interests of your mortgage-holders and your own. Your Lackner McLennan Commercial Insurance Specialist can provide you with a loss-exposure checklist to ensure everything that should be included has been addressed. Legal Liability — Most exposure arises from negligence causing injury to persons or damage to property. This is an issue if your company has employees, and/or is bound by contracts such as leases, construction contracts, purchasing contracts, and equipment rental agreements. Loss Prevention — Protect your property from loss and reduce insurance costs by taking steps to discourage burglars, shoplifters, vandals and arsonists. Secure doors, windows and storage areas. Isolate flammable materials. Encourage employees to help protect the company by being watchful and careful. Back up computer files regularly and store disk at an off site location. Maintain stringent inventory control and bookkeeping to deter employee and supplier theft. The Risk Management Process Managing business risk is essential. Your Lackner McLennan Commercial Insurance Specialist will guide you through a four-step process to ensure your business is properly protected: 1. Risk Identification A review of both direct and indirect risks to business assets and other areas of exposure. 2. Risk Assessment An assessment of the risk of loss, the likelihood of recurring losses and the potential business impact. 3. Risk Reduction A comprehensive risk reduction plan for your business that could include measures such as: alarm systems, secure cash handling procedures, sprinklers, smoke detectors, and driver training programs. 4. Risk Reassignment Once steps to reduce loss exposure have been taken, Your Lackner McLennan Commercial Insurance Specialist completes your business' Risk Management Program by obtaining the necessary insurance coverage to achieve both protection and value for your business. Annual Risk Management Reviews Each year, Your Lackner McLennan Commercial Insurance Specialist will conduct a Risk Management Review to determine how your commercial insurance needs have changed. You may have additional or reduced coverage requirements as a result of changes that have occurred during the previous year. Your Annual Risk Management Review ensures adequate protection and the best value for your business. It includes a review of: Operations — What changes have been made this year, and what additional changes does your business anticipate in the upcoming year? Business Volume — Your insurance premium is primarily based on volume of business, i.e. the higher volume, the higher risk exposure.Have changes to business volume occurred? Coverage Limits — Have you acquired or purged equipment from your operations? Inflation — Has the increase in inflation affected your building and/or its contents? Types of Coverage — What insurance coverage does your company currently have? What additional coverage does it need, and what coverage can it do without? Proliferation of technology, for example can reduce coverage needs i.e. the existence of debit cards has decreased the crime and burglary coverage needed in retail environments. Data integrity — What are your current data back up storage and restoration processes? What is your company's exposure to valuable paper loss? Contact your Lackner McLennan Commercial Insurance Specialist to learn more about Risk Management and to schedule your next Risk Management Annual Review.

Internal Theft Theft by employees is something no business wants or expects to experience, but it is still important to insure against such a loss should it occur. Employers can insure themselves against financial loss due to employee theft by applying for a bond. There are three basic types of bonds to protect businesses. These include: Name Schedule Fidelity Bonds This coverage is designated for a specific list of employees. Collection coverage relies on absolute proof that an employee theft did occur. Blanket Position Bond Specific to a particular job position rather than an individual employee, this bond offers coverage for each employee up to a set maximum dollar amount. Primary Commercial Blanket Bond A Primary Commercial Blanket Bond treats all employees as one unit. Therefore, whether one or five employees were involved in a crime your company would be able to claim the same amount. Why be vulnerable to employee theft? Talk to your Lackner McLennan Commercial Insurance Specialist about the right bonding insurance coverage for your business.

How Long Will It Take Your Business to Be Up and Running Again? Computer-related mishaps such as a hard disk failure, a virus, accidental file deletion, theft, or damage caused by a fire or flood can wreak havoc on everyday business activity. For many companies, loss of data and intellectual property can be catastrophic. Recreating lost work can be impossible if proper back up procedures are not in place. At Lackner McLennan, we ensure that all of our valuable data is backed up safely and securely. Our data maintenance, back up and restoration procedures are as follows: Running two hard drives off the same server at all times so that our data is backed up daily to two different locations. Conducting tape back ups every night and storing back up tapes offsite. Ensuring the integrity of the back up by sourcing a third party to test our back up tapes every six months. Burning data to writeable CDs once a week, and storing the CDs offsite. Sourcing a third party provider to restore our offices with equipment that is compatible to both our servers and programs in case of a loss. This ensures that our operations can be up and running within one business day should a theft or catastrophic event occur. As you can see, your business' confidential information is secure with Lackner McLennan. Learn more about safeguarding vital data within your business — talk to us today!