Protecting the digital supply chain is just as critical as the physical supply chain. Understanding where your data is and how it’s protected and who has access to it is important to the supply chain. Experts say that the cyber exposure to supply chains is just as important to guard against as physical exposures.

In a recent article that Zurich published on cyber security, experts were most concerned with attacks on such industries as power generation or chemicals to cause industrial disasters. Further, the government warns that the attackers now want to go beyond snooping or stealing intellectual property and actually disrupt control processes. The recent Supply Chain Disruption study from the Business Continuity Institute also indicated the IT system exposure of supply chains.

The World Economic Forum also reported that cyber risk was one of the top risks of 2013 and will continue to evolve as a threat in coming years.

Zurich recently issued a video around cyber threats and their impact on the supply chain via our Supply Chain Risk Insights website, which discusses the risks and how they can be managed.

• 82% of banks offer mobile banking technology through apps
• In 2012, 1 in 5 people use a mobile device for banking transactions
• In 2013, 1 in 3 people use a mobile device for banking transactions
• Remote deposit capture doubled to 21% from 2012 to 2013

With mobile banking on the rise in addition to companies switching to a Bring Your Own Device (BYOD) culture – it creates a perfect storm of opportunities and risks for both banks and employers – so how do they manage that risk?

Security, privacy, coverage are needed with remote devices

Recently, Chris Taylor, Head of Financial Institutions for Zurich North America, participated in a webcast with CFO magazine. He was joined on a panel with several other experts, including Michael Kaiser, Executive Director, National Cyber Security Alliance; Robert Parisi, Network Security and Privacy Practice Leader, Marsh; and Matt Speare, Chief Technology Officer, M&T Bank to discuss how BYOD can expose both the bank the individual banks with and the company the individual works for.

Interconnectivity: Online all the time

The number of devices connected to the internet is expected to reach 31 billion by 2020, according to the World Economic Forum’s 2012 Global Risks report. Further, 35% of the global population is online – up from eight percent a decade ago. Parisi spoke to how this hyperconnectivity can lead to more cyber crime and attacks, as well as how pathways to information can be disrupted and interfere with commerce.

So what does this mean for the BYOD era and security?

According to a study by Gartner, Inc., a leading information technology research and advisory company, 70% of employees will conduct work on personal smart devices by 2018.

Kaiser spoke to this data point during the panel discussion, adding that employees are turning to BYOD because they want more control of the information they consume and when they consume it.

Security is often about control of the device and access to networks and data. According to Kaiser risks with BYOD include:

• Data loss: weak passwords, virus attacks
• Device and network management – is software updated? Who is actually using the device?
• Devices are too easy to lose and can get stolen with data on it.
• Recycling devices: helping employees get rid of old devices in a safe manner; wiping them of any valuable company and personal data and information to protect the company as well as banks from risk.

Risk management and insurance

In the webcast, Taylor breaks down risk mitigation techniques as well as highlights data security and privacy insurance coverage available to financial institutions, including:

Prevention & processes

• Cyber risk assessment (remote audit, on-site in depth)
• Review of security practices
• Identification of strengths, network and system vulnerabilities
• Education & awareness
• Network vulnerability scan & testing services

Products & services

• Third-party liability coverage
  • Security & privacy liability
  • Internet media liability coverage
• Privacy breach costs coverage
  • Forensic investigation expenses
  • Legal and public relations expenses
• First party coverage
  • Business income loss
  • Digital assets replacement
  • Cyber extortion threat and reward payments

For access to the full webcast: Mobile Transactions in the BYOD Era: Opportunities and Risks

This was the very topic of discussion during a panel at Zurich Classic of New Orleans in late April. The panel featured Jason Healey, director of the Cyber Statecraft Initiative of the Atlantic Council, a group that promotes U.S. leadership on international affairs, Paul Schiavone, Global Chief Underwriting Officer for Special Lines, Zurich General Insurance, and Paul Twomey, founder of Argo Pacific, a firm that helps companies develop Internet and technology businesses. Their discussion centered on vulnerability to cyber attacks and how security isn’t always possible, but sound risk mitigation is.

“Everything is interconnected,” Twomey said, and it is unrealistic to think that “you could somehow build a fort around the company with more servers and more firewalls.”

Further, understanding company security and privacy issues go beyond IT, Twomey said. It’s an enterprise risk management issue, which means the C-Suite level executives need to be kept informed just as much as the front line security.

“It’s everyone’s problem,” Schiavone said, “starting with the board of directors, to the C-Suite, all the way down and including all the employees.”

Schiavone added that cyber risk is not limited to cyber security and involves data protection and protection of proprietary information. Theft of data and proprietary information isn’t always a result of a breach, but can be a physical loss of a laptop, tablet or smartphone – which is becoming more prevalent in a bring your own device (BYOD) era.

How can technology insurance help protect you from these risks?

For related information on this topic check out the following white papers:

Information Security & Cyber Liability Risk Management

Companies Seek Protection from a Growing Wave of Cyber Crime

Getting a Total Risk Profile

Zurich Risk Room demo at the Zurich Classic of New Orleans business session in April.

Digital risks are only part of the picture and Zurich is using technology through the use of programs and applications to help businesses better understand their risks and steps they can take to mitigate risk and loss costs.

One way to do this is through the Zurich Risk Room app – which is available to download on iTunes. Zurich Risk Room is an award-winning tool that can help you make better-informed strategic decisions by giving you a clearer picture of the huge variety of interconnected global risks faced by your business.

Just a snapshot of the Risk Room and its capabilities:

• Encompasses over 70 economic, business, political, social, environmental and technological risks across more than 160 countries
• Allows you to analyse and compare these risks in any combination and by country, so you can explore the scenarios that are important to you
• Delivers its results in a graphical format that makes complex information easy to understand
• Is based on data from leading international research institutions, and is updated regularly

Does your business know their exposure to cyber risk? Does it understand it’s total risk profile?

This isn’t your father’s manufacturing industry though. Technology moves the industry into the 21st century and beyond, enabling mass customization, 3D printing and low-cost computer aided design. This takes your traditional manufacturing out of the offices and factories and in some cases can put it right in people’s homes.

To find out more about our findings, check out our report: “Growth Opportunities for the American Worker: Hottest Growth Industries by Decade 1890-2020,” as well as the infographic “Navigating the Future of Industry.”

To help answer that question and provide some perspective around Big Data, we caught up with Larry Collins, vice president of our E-Solutions unit within Zurich Services Corp.’s Risk Engineering Services.

The single greatest asset a business possess in this digital age is information. Data and intellectual property can lead to a businesses success, but if not protected properly, can lead to its downfall. A “self-check” of the types of information a company has can help them better understand what is out there and how it should be managed.

Zurich recently put together a guide to assist a business in going through this process. The word cloud below puts emphasis on perhaps the most important pieces of this puzzle – “data” and “information.”

Click to enlarge word cloud

Access the Zurich General Information Privacy Self-Check Program

I had just stopped in to check on a job recently for a new client, when a burning chemical smell assaulted my senses. After checking on our technicians to make sure they were OK, it didn’t take me long to trace the source of the harsh fumes. Not far from our team, a worker from another company was stripping and waxing our client’s floor.

My first thought was there must be a mistake. Our client prioritized using environmentally friendly alternatives at their facility and the service truck in the parking lot was from an “Eco” branded company. So I checked out the chemicals this “green” company was using and I quickly found the answer: greenwashing.

This company, like so many others in real estate services industry, clearly recognized the growing appeal of sustainability by marketed itself as green to environmentally minded clients but it failed to provide true sustainable services. The proof was right there in the toxic bottles of chemicals I was inspecting that will never earn a Green Seal certification, EcoLogo label nor contribute to a single LEED rating point.

Everywhere you look today you’ll find “green” companies that use branding to evoke environmental friendliness – leaves, water, the Earth, etc. – but peel back the layers and you’ll often find little substance to their sustainable story.

Regulators have responded to this trend. Last year, the Federal Trade Commission released an update to its Green Guides, which provides guidelines on how businesses should incorporate environmental messages when marketing their products and services. Though the revisions were part of a planned update of the guides, Laura Koss, a senior attorney with the FTC, said the changes were driven in part by demand from public agencies, businesses and consumer groups “to help create a level playing field in environmental marketing.”

“I do think that as long as this is an area that is hot in the market place, the FTC will make an effort to enforce deceptive marketing claims,” said Koss, who pointed to a number of businesses who have been cited for making false claims regarding the environmental benefits of their products and services.

But the few dozen enforcement actions the FTC reported since the 1990s, hardly scratches the surface of the green marketing claims that exploded in both the consumer and B2B marketplace the past several years. It is clear that regulators cannot pursue every questionable environmental claim and that has helped propel a push from the private sector for more product transparency, including the building sector. For example, a group of building industry experts rolled out the Health Product Declaration Open Standard last year to provide a standardized format for building product disclosures.

Yet, according to Jennifer Atlee, a senior research associate with Building Green, green certifications of building products are a “mess” as there are many competing standards with varying degrees of rigor.

“Standards and certifications are all over the map right now,” Atlee said in a recent webinar.

Better regulatory enforcement and stronger commitments by the private sector to identify and meet clear standards for environmental performance will help move the marketplace away from greenwashing. But that only focuses on the cadre of players who are either concerned with regulatory scrutiny or truly care about their environmental impact. Meanwhile, a significant slice of the marketplace will continue to greenwash their customers with false claims of environmental benefits. As a result, business and consumers must be educated and on guard when presented with green products and services to determine what is real and what is not. That, in turn, forces truly green companies to fight harder to stand out from all the greenwashing.

It isn’t easy. I should know. I’ve seen plenty of sophisticated real estate organizations with rigorous vetting processes buy into greenwashing. I’ve also been deceived.

Last year, we started a business relationship with an individual who presented what appeared to be a substantial history of inventing green products. This person provided us with extensive documentation and a track record of third-party vetted experience, supported by awards from various agencies and extensive media coverage by respectable outlets. We hired attorneys and other professionals to help us assess the business and we never turned up a clear red flag. It was only after we began working with him and things started going wrong that we started piecing together the truth of this individual; what he really invented was an elaborate deception, he is under investigation for multiple allegations of fraud and we have since sought to distance ourselves from him.

The hard lesson here is that even someone like me, who has a deep understanding of sustainability and a nose for sniffing out greenwashing, can still be misled. And what is greenwashing, but a deliberate attempt to deceive by making unjustifiable claims about a product or service for wrongful gain? Isn’t that essentially the definition of fraud? Is it time we started treating all greenwashers as frauds?

It’s a biological bond where exposure to nature can affect your blood pressure, heart rate, hormones and other vital functions – think the first time you met your spouse or significant other for a sense of how powerful this attraction can be. This deep connection is central to the concept of Biophilia, which was popularized by biologist Edward O. Wilson.

“Biophilia is the innately emotional affiliation of human beings to other living organisms,” Wilson said “Life around us exceeds in complexity and beauty anything else humanity is ever likely to encounter.”

Many of us may not aware of this intense relationship as we interact less with nature on a day-to-day basis due to a life led mostly indoors. Yet, this need to connect to nature is consistently expressed in real estate decision making and helps drive the “sex appeal” of properties for prospective tenants. Consider that much of the most highly sought after real estate tends to be found in coastal areas or spaces that boast expansive views of the surrounding environment.

In fact, according to “The Economics of Biophilia,” people will pay 58 percent more for properties with a view to water or 127 percent more for lakefront property. The 2012 study by the environmental consulting and strategic planning firm, Terrapin Bright Green, lists a number of other compelling data points from various workplace studies for why designing with nature in mind makes financial sense for commercial property owners seeking to attract tenants, including:

• Integrating quality day lighting schemes into an office space can save more than $2,000 per employee, per year in office costs.
• Ten percent of employee absences can be attributed to architecture with no connect to nature.
• Presenteeism, when workers are on the clock but are mentally removed from the workplace, costs private employers an estimated $938 per employee, per year. Providing access to natural daylighting, outdoor views and natural ventilation can relieve mental fatigue and return workers’ attention to work.
• Researchers have found that workers handle calls 6 percent to 7 percent faster than those with no views.
• When view quality is combined with improved lighting quality and window area, architectural elements contribute to a 10 percent reduction in employee sick leave days.

More compelling than these statistics is the fact that productivity costs are 112 times greater than energy costs in the workplace. More specifically, using 2009 values, Terrapin’s analysis found that more than 90 percent of the cost-per-square-foot of a given corporate office space is devoted to salary, while only 8.9 percent is paid toward rent and mortgage and 0.8 percent represents energy costs. Yet, when we talk about green the discussion tends focuses on reducing energy costs – no wonder green lacks appeal to many real estate investors.

This information clearly drew the attention from the audience at BISNOW’s SoCal Sustainability Summit held in October downtown Los Angeles. Sponsored by my friends at Zurich, the panel included myself, CodeGreen Director of West Coast Operations Jessica Handy, Westfield Senior Design Manager Jhoiey Ramirez, Dan Kleiman, head of real estate for Zurich North America Commercial, CB Richard Ellis National Director of Sustainability Dave Pogue and Prologis’ Director of Sustainability Programs Aaron Binkley.

Much of the focus of greening commercial real estate to date has been on the behind the scenes as owners invest in the latest and greatest technologies to make their buildings operate more efficiently. But this also can result in buildings that are “oddly inhuman,” according to Hao Ko, a senior associate and design director at Gensler.

“The problem with these more complex buildings is that they can disenfranchise people, leading to a passive relationship between people and their environment,” Ko wrote in a recent piece for Fast Company, called “These Skyscrapers Are Designed to Make You Happy If You Work In Them.”

Ko described some next generation high-rise projects that incorporate “skygardens” and double-skin facades that allow building occupants to open windows to let in fresh air, even on the upper stories as a better, more holistic approach to green building.

“We believe that buildings that engage people in their surroundings mean that people are more invested in – and happy with – their surroundings,” Ko said. “We think the definition of what it means to be sustainable in the 21st century needs to be broadened to include a skyscraper’s (or any building’s) ability to sustain the human spirit as well as its performance goals.”

These benefits can extend to other property types, including health care and retail, according to Terrapin’s study, where well executed green spaces can help reduce hospital stays for patients and improve sales in retail stores. For example, on the retail side, shoppers in greener retail settings will pay as much as 25 percent more for an item than they would in a traditional retail setting.

Again, execution is key. When I cited this statistic during the BISNOW panel, Jhoiey said that retail’s experience with greening space has been mixed. She said that shoppers and tenants alike did not respond well to poorly lit spaces that relied solely on natural light. Nonetheless, Westfield is in the process of moving its offices to a new, greener space that will offer employees a more open, collaborative work environment that the company hopes will lead to improved productivity and higher employee satisfaction.

Indeed, according to the Terrapin study, it could cost an average company of 1,000 employees with an average compensation of $33.24 an hour $25,875 to lose a worker due to dissatisfaction, illness or poor work environment.

So if it mounds of cash and robust profits, not rolling countryside and verdant forests that gets your heart racing, take a comprehensive approach to greening real estate that addresses systems, operations, finance as well as the human connection to properties. You may say that people’s tastes are fickle, but this trend is no fad. In Deloitte’s “Commercial Real Estate Outlook: Top Ten Issue in 2013,” sustainability ranked No. 8, noting that green initiatives can be a “powerful driver for developing innovative processes and operating models if all the risks and opportunities are appropriately considered.”

“Currently, many CRE players adopt sustainability initiatives on an ad-hoc, project-wise basis; however, to be truly effective, a sustainability strategy should be implemented at the enterprise level, where it can impact social, economic, and environmental issues,” the Deloitte report stated.

In other words, you can’t put lipstick on an energy hog and call it a green building.

• Personnel safety is priority #1. Protect employees while they work at heights, enforce lock out/tag out procedures and electrical safety, use good material handling practices while moving equipment or making preparations and monitor work surfaces to help prevent slip, trips and falls among workers, customers and emergency service personnel.
• Business continuity begins with your people. Consider activating work-from-home procedures and limiting non-essential travel. Be conscious that some employees may be scrambling to find childcare if schools in your area are closed.
• A clogged roof drain can actually collapse your roof. It’s fall, and leaves clogging gutters on roofs and sewer systems on the ground have the potential to collapse your roof or back water up into your basement and ground floors. Have your roof professionals clear gutters and contact local authorities to clear sewer systems before the storm. Make any necessary roof repairs now to help prevent more damage later.
• Be supply chain savvy. Numerous major American retailers, manufacturers and distributors rely on goods received along the Eastern seaboard. The American Association of Port Authorities ranked the New York/New Jersey area as the third largest container traffic port in 2011 (Savannah, GA was fourth). Have your suppliers’ (and, if applicable, their suppliers’) information handy, and review your backup plans in event of a supplier disruption. A supply chain healthcheck may help identify potential kinks in your chain.
• Collect and protect critical information. Take your policy documentation and other important documents with you in the event of an evacuation. Make certain your servers are in a secure area and move to a higher elevation if possible.

For more information about windstorms, visit www.zurichna.com/windstorm

According to Accuweather reports, Isaac has dumped nearly 2 feet of rain, with 23.31 inches reported in Gretna, La. As the storm system spins north, it’s expected it will continue to produce saturating rains, heightening the risk of inland flooding in low-lying areas and watersheds.

Meanwhile, as storms begin to clear people will begin assessing damage to homes and businesses, which can prove to be dangerous, particularly in flooded areas.

Cleaning up after a disaster can be tricky, especially when comapanies turn to their employees to help out with the job. It’s important to have a plan in place that will help expedite the recovery effort in a careful manner.

Good communications, application of best loss prevention practices and actions that drive restoration while protecting against further loss are recommended during this process.

Zurich offers more detailed information on this in its “Tips for property protection during cleanup and recovery operations” risk topic.

To file a claim with Zurich:

• Internet: Go to http://www.zurichna.com > Claims Contact
• Phone: Claims Reporting Care Center at 1-800-987-3373
• Fax: Dial 1-877-962-2567 to send all important documentation
• E-mail: Contact Zurich’s Claim Reporting Care Center at usz_carecenter@zurichna.com
• U.S. Mail: Zurich Claim Reporting Care Center, P.O. Box 49547, Colorado Springs, CO 80949-9537

How has your business been impacted by Isaac? If you had operations based in the Gulf Coast area, how do you handle returning to work and do you get employees involved in the clean up effort?