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Archive for category: Technology

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TechAssure Names New Member Firm in Kansas, MO

CHARLOTTE, NC – Jan. 9, 2016 – TechAssure, the international nonprofit association of insurance and risk management experts for technology-related risks, has named Brush Creek Partners as a new member effective immediately. Based in Kansas City, MO, Brush Creek Partners is an independent, full-service insurance brokerage firm that specializes in assisting middle-market technology and life science industry clients with their insurance needs.

“Kansas City has a vibrant and growing tech scene and we are pleased to have a high-caliber firm like Brush Creek Partners in the region,” said TechAssure Executive Director, Garrett Droege. “Brush Creek Partners is a great addition to our international network of specialist brokers.”

Brush Creek Partners is dedicated to managing the full range of personal and business risks, including data breach and cyber liability, D&O, E&O and more. Founding Partner, Travis Holt, added, “We’ve considered ourselves thought leaders and innovators in the technology risk management and cyber liability insurance space for a long time, but to have a group like TechAssure validate that is powerful.  We’re excited to bring even more value and resources to our clients with technology-related risks.”

MORE ABOUT TECHASSURE
TechAssure is a unique consortium of risk management experts serving innovative industries, such as technology, telecommunications, life sciences, clean tech, as well as the venture capital and private equity firms that fund them.   Comprised of 22 specialist firms located in strategic locations across the world, TechAssure members collectively serve over 4,000 clients and represent over $3 Billion in premium volume.    The association also produces a proprietary annual benchmarking report for the industries it serves. TechAssure is currently celebrating its 15th year.

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If you would like more information about this topic, please contact H. Garrett Droege, CPCU, CIC at 704-997-3238 or email at garrett@techassure.com.  Or visit www.techassure.com or on Twitter @TechAssure

Brush Creek Partners: Travis S. Holt – Travis.Holt@brushkc.com

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Technology Industry, Global Regulations and Effective Board Governance

The global economic crisis has imposed higher risks and challenges for board governance.

Boards of technology companies have significant challenges.  Often times they have incomplete management teams, inexperienced founders, lack of resources and more.  In the TechAssure Association annual risk report, we cite that global regulations also impact the effectiveness of board governance.

During the second set of meetings during the Global Strategic Leadership Forum in Atlanta, the World Affairs Council stated that contemporary global companies face more intense governance issues than ever before. Their determinations have led to discussion on how globalization has called on companies to re-examine their risk management strategy in order to successfully adapt to the complicated matrix of the regulatory environment.

The World Affairs Council stresses the fact that the board should re-evaluate governance strategies to include not only profitability and growth, but escalating risks due to the overly complicated regulatory processes they face in the U.S. and other sovereign nations. Unfortunately, government intervention in company dealings can come suddenly and unexpectedly. Rules and regulations across the globe can be conflicting which makes the governance of an international board even more complex; diluting the potency of solid governance strategy.

Regulatory laws such as the Foreign Corrupt Practices Act, the UK’s United Kingdom Bribery Law, and the Dodd-Frank Legislation have had a major impact on internationalized business board governance. Conflicting global legislation can have major consequences for international technology companies. Even if an infraction occurs in a small jurisdiction and is committed by one employee, the board must be informed so that they may take action to avoid catastrophic damage to a firm’s finances and reputation. 

These regulations have increased risks to firms to the technology industry.  A strong board which implements a versatile board governance strategy is the only way in which a company in today’s market can survive and flourish globally. Consistent risk audits must be performed regularly and CEOs and board members must remain vigilant; reassessing strategies and making adjustments which correspond with audit results.  

Board members and officers are faced with increasing personal risk in an ever changing global regulatory environment. Working with a TechAssure Association member can help your board stay protected and help your firm develop a broad global risk management strategy in a rapidly changing world.  Please contact us for more information.

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5 Basic Steps to Get Started in Enterprise Risk Management

If you are an innovative firm, then managing risk is an essential part of doing business. There are no standard enterprise risk management (ERM) plans that fit every technology firm. Each innovative firm is different and an Enterprise Risk Management program has to be designed to fit the specific needs on an individual business.

But there are five basic steps that a technology firm can take when starting their Enterprise Risk Management program. The ERM program should reflect the company’s culture and particular structure.

1. Personnel – The first step to developing an effective ERM plan is to involve key company personal. A team has to be assembled that will be responsible for overseeing the creation of the ERM plan as well as its implementation. Who are the key people in your organization that will be involved in establishing your enterprise risk management program?

2. Preparation – ERM preparation requires a realistic approach. By now you should have taken the basic steps to identify the critical risks that your organization faces. The next step will be to better determine your level of acceptable risk retention. Implementing an ERM program can help you broaden your scope of methods for managing those risks.

3. Documentation – The research involved with creating a company’s ERM plan needs to be thoroughly documented. This may involve interviewing key managers as well as conducting risk surveys and more. Sharing such documents among key personal can provide valuable ideas and provide resolutions for better managing those risks. The ERM plan should now be put together and reviewed. But keep in mind, an ERM program is always a working document. As your organization grows and changes, your ERM program will need to adjust.

4. Implementation – Once the ERM plan is created and passes the approval process, it is time to put it into place. All people involved with the ERM plan must be know their responsibilities. The plan needs to have event identification, risk impact response as well as defined actions that will be taken. An ERM plan without any implementation is not helpful in moving your organization to a higher level.

5. Monitor – Once an ERM plan has been created and put in place, it’s important it also be supervised. This can involve periodic audits, reviews, assessments and more. Effective supervision might also involve third parties to make certain the ERM plan is current and meeting all designated goals. Regular ERM monitoring will need to be done for the long term.

It’s important for companies in the technology and life sciences industries to manage all of their organizational risks. To do this properly may require getting assistance from industry experts. The members of TechAssure Association have the knowledge and experience necessary to provide expert advice for effective risk management. Contact us today to learn more.

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Securities Class Action Lawsuits Against Life Science Firms on the Rise

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Executive liability is a large threat for all sizes of technology and life science firms.  In addition to litigation damages and expenses, companies face distractions, and loss of corporate opportunities.  Although a comprehensive executive liability insurance policy will go a long way towards reducing the exposures, they face greater exposures if they have no risk control practices in place.

Reviewing the Claims Data

Upon the release of this year’s Dechert Survey of Securities Fraud Class Action Lawsuits, many Life Science firms have been forced to take a closer look at their risk avoidance strategies. The Survey showed that securities class action lawsuits against life science firms have continued to rise steadily since 2011. 

The survey showed that in 2012, 27 pharmaceutical, bio-technical, and medical companies faced security suits. This number represents over 18% of all securities suits filed during the year of 2012. During the year of 2011 only 17 companies experienced securities suits, reflecting a total of 9% of total securities claims. This information shows that from 2011-2012, securities claims nearly doubled.  Unfortunately, small cap Life Science firms continue to be targets for suits. Those with market caps under $250 million made up 50% of all claims against Life Science firms. In comparison, the survey showed in 2011 these firms accounted for 58% of total claims. 

Over 43% of the total claims dealt with misrepresentations of products and product safety.  In addition, insider trading still appears to be a common part of most of the complaints that are filed.  It is important to develop a comprehensive Directors and Officers Liability program that includes a solid risk control program. Smaller companies must be especially vigilant as the studies show they are at the highest risk.

Directors and Officers Liability and Risk Control

D&O insurance is designed to protect against claims made against them while serving on a board of directors or as an officer.  These policies are written on a claims-made basis, usually contain no duty to defend policy language and the scope of the coverage, pricing and underwriting criteria can vary. 

When a Life Science firm includes risk control into their comprehensive D&O program they can do a lot to reduce the threat of D&O claims.  D&O loss control programs specifically tailored to their company Includes risk control in areas of securities trading, antitrust compliance, financial integrity, managing conflicts of interests, bribes and kickbacks, board appointments and behavior, misappropriation of corporate assets and confidentiality. The goal of any D&O loss prevention program is to sensitize the company’s executives to exposures and place policies and procedures to minimize the exposures.

Working with a TechAssure Association member can help you develop a comprehensive D&O program.  A TechAssure member will help you customize an insurance plan, which will work seamlessly with your risk control strategy.  Please contact us for more information on how a TechAssure member can help your firm.

 Source: http://www.dechert.com/Dechert_Survey_of_Securities_Fraud_Class_Actions_Brought_Against_US_Life_Sciences_Companies_03-20-2013/

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Business Trends that Drive the Need for Technology E&O

In the world of technology, it’s always a given that things can go wrong. Unintended errors may occur because of software programming or performance issues or any other aspect of providing a technology product or service. When this results in customers experiencing a financial loss, they make take legal action to be compensated. In order to provide a level of protection against this type of risk, a Technology Errors and Omissions liability policy is needed.

This type of insurance coverage could include costs associated with a legal defense for accusations made against a technology company. It could cover court costs and subsequent judgments against a company, up to the limits of the insurance policy. Each technology errors and omissions insurance policy is different in scope. You will need to work directly with a professional risk advisor to ensure that the policy you are considering matches the exposures that are unique to your firm.

Business Trends that Drive the Need for Technology E&O Coverage

We have observed a number of notable changes driving the need for Technology Errors and Omissions coverages. They include the fact that more business contracts now require evidence of E&O coverage, which naturally will increase the size of business contracts and the amount of time and attention you need to devote to them.

What Can Technology Firms Do to Mitigate their Exposures?

There are several ways to mitigate exposures to electronic disputes. Chief among them is a legal review of all purchase orders, contracts and license and service agreements. You will need to review limitations of your liability in all documents, as well as any warranty disclaimers in your contracts. It’s also prudent to review severability clauses, indemnification procedures and arbitration provisions.

But Our Commercial General Liability Policy Will Cover Technology Exposures – Right?

Wrong. Some technology firms assume that their Commercial General Liability policy will respond to claims arising from programming errors or software failures. It is unlikely that a Commercial General Liability coverage would respond to a technology related claim. Firms also make the assumption that by simply purchasing any Technology Errors and Omissions insurance policy, all of their technology risks will be covered. Smart firms find a way to get educated on Technology Errors and Omissions risks and cyberliability insurance products. They will weave together their internal and external risk control measures before purchasing an insurance program for their organization.

Establishing Technology Errors and Omissions and protection against cyber-related risks is an important part of your business. Working with a TechAssure Association member can help you identify your exposures and establish a risk management program for the best protection. Please give us a call for more information.

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High Growth Firms and Risk Management

The global financial crisis has led to dramatic and ongoing changes in risk management among many technology and life science firms. As a result, most technology and life sciences business leaders face unprecedented challenges as they grow their firms from the early stage to maturity. However, we continue to witness the growing list of high-growth firms in this category and we believe they have unique insurance and risk management needs. These firms must make risk management central to their business at an earlier stage in the corporate life cycle in order to have the best chance for survival.

Rapid-growth companies aren’t afraid of taking calculated risks. They often learn how to turn risk into opportunity and find themselves doing that better than their competition. This means that before they jump into opportunities, they calculate the risks and are more aware of the potential consequences. Developing a corporate risk management approach at an earlier stage in the firm’s life cycle is crucial for ensuring the continued interest of investors and strategic partners.

A growth firm is recognized by its ability to increase its business by a significant amount very quickly, but it’s important to realize that there are challenges with such a fast increase in business. Demands for capital to increase and expand production, hire additional workers, increase locations and more are necessary to maintain high growth rates. Investors are usually asked to take a new look at a growth business and the potential it has for increased profits and cash flow.

A growth firm will experience increased market share and profits. It puts them in the position of decreasing competition. They will be able to better seek out the latest ideas and innovations in their industry. One important result is that higher skilled workers will want to be a part of a growth firm.

As a growth firm enlarges, its insurance needs will also tend to increase. It will be important to adjust insurance coverage as is necessary. Additional insurance products may be needed and adequate liability insurance needs to be in place as the company changes and grows.

Growth firms do many things to maintain their momentum. Having a risk management plan that changes with your organization is important. Contact a TechAssure Association member to learn about our special services for high growth firms.