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Tag Archive for: technology

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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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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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Technology Errors and Omissions: Not All Insurance Programs Cover the Unique Exposure of a Tech Company

Every growing and established firm conducts business with some amount of risk. It is risk that brings the most reward to a company but it can also bring great pitfalls upon a company because of unforeseen incidents. Technology companies are unique in how they operate and it is important to recognize that not just any insurance program or policy can fulfill the coverage needs of technology-based businesses.

Understanding the hidden risks of running a technology firm is important when deciding exactly what insurance coverages you may need. For the purpose of this article, we focus on two types of coverages essential to technology firms: General Liability and Errors and Omissions.

Technology Errors and Omissions can be expanded to include coverage extensions that address risks from network security, privacy, damage to intangible property and breach of security.

A standard General Liability policy issued to an organization protects it against liability claims for bodily injury and property damage arising out of premises, operations, products, completed operations and advertising and personal injury liability. A General Liability policy for a technology firm may have additional coverage restrictions and exclusions, making Technology Errors and Omissions coverage a vital tool for protecting the assets of a technology firm.

It is key that these two coverage components “sing in harmony.” While a General Liability policy has typical exclusions that tie to claims arising from errors and omissions, network security, privacy and breach of security, the language in the policy wording can be important. On the other hand, while an Errors and Omissions policy has exclusions that tie to other casualty policies, the language in the policy wording is also important. It is important to review these two coverage components together.

It is also important to remember that a Technology Errors and Omissions policy does not always extend to your subcontractors and may not be considered valid on a worldwide scale. Every insurance contract is different. The key to building a successful insurance and risk management program is to review where your company will in 12 to 24 months and then design an insurance and risk management program that will change with your needs.

Unintended exposure to Errors and Omissions claims can cause a company disastrous loss if their insurance coverage is insufficient. A member from TechAssure Association can help your company get the right coverage. By analyzing your company’s unique business needs, a TechAssure Association member can customize an insurance program to protect your company and your investments. Please contact us for more information.

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Reducing Your Cyberliability Risk

Cyberliability is a term used to describe how much damage will be done if your company experiences a data leak. Handling private data, as every modern business does, puts you at risk for having it lost or stolen which in turn could leave you facing some very costly lawsuits. Fortunately, there are some relatively easy steps you can take to reduce your cyberliability exposures.

Don’t carry vital data around with you. Mobile devices are great for efficiency. You can look over reports or check your email almost anywhere you go. The down side is that any vital data you carry on these devices becomes a cyberliability risk. It’s too easy to lose or have a smart phone, laptop, or tablet, stolen, then all that data is there for everyone to see. A great alternative is cloud storage. It allows you to access data online without ever downloading it. You log on with a password, use the data, and log off. Nothing is stored so if your device goes missing, the data doesn’t go with it.

Password protection and firewalls are great ways to protect data, but sometimes they are not enough. If a hacker gets through these, you need data encryption as a last line of defense. When you encrypt all your data, even if someone does hack into your system and steal it, they can’t use it.

Strict password policies are something most staff members hate. Coming up with new passwords every month can be irritating and difficult. If you really want to reduce your cyber liability risk this is a vital tool to use. Do not use one password for all your personal and business accounts. All it will take is for a hacker to gain access to one of those accounts, then all of your company data is in jeopardy. It may seem like a pain and it will upset your staff, but a strict password policy will save you a lot of money in the long run.

To discover other ways in which we can help you protect your organization from cyberliability risks, please give us a call.

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TechAssure Association Reviews Trends in Verdicts and Settlements for First Half of 2013

Click here to view our one-page summary.

 

In June 2013 TechAssure Association reviewed litigation trends in the technology and life sciences industries for the first half of 2013.

The following summarizes the findings on the current trends in verdicts and settlements in the technology and life science industries:

Top 10 Claim Categories in the Technology Industry

TechAssure reviewed 349 verdicts and settlements in the technology industry and concluded the following:

84% of the cases reviewed found the top claim categories: (in rank order)*

  1. Patent
  2. Privacy, Network Security
  3. Price Fixing
  4. Employment
  5. Consumer Class Actions
  6. Fraud
  7. Antitrust
  8. Contractual
  9. Insider Trading/SEC
  10. Trademark

TOP 10 CLAIM CATEGORIES in the Life Science Industry

TechAssure reviewed 310 verdicts and settlements in the life science industry and concluded the following:

82% of the cases reviewed found the top claim categories: (in rank order)*

  1. Products
  2. Patent
  3. False Claims/False Ads/Marketing/Labeling
  4. Price Fixing
  5. Antitrust
  6. Employment
  7. Kickback/Billing Practices
  8. Whistleblowing
  9. Fraud
  10. Contractual

* Verdicts and settlements January 2013 to June 2013.

TechAssure also noted a number of growing litigation trends during the first half of 2013. The growing litigation categories included:

Growing Litigation Categories:

  • Privacy
  • Network Security
  • Data Breaches
  • Whistleblowing