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Column: Technology

Can We Trust Driverless Vehicles?

By: | September 15, 2014 • 3 min read
Ara Trembly is founder of The Tech Consultant and The Rogue Guru Blog. He can be reached at riskletters@lrp.com.

Several years ago, I read a story about a man who purchased a brand new mobile home. One day, while driving along, he decided he needed a cup of coffee, so he set the mobile home on cruise control and walked back to make said coffee.

Needless to say, the vehicle ran off the road and crashed. It turns out this story wasn’t true, but it does reinforce the idea that technology left alone in a moving vehicle may not be a good idea.

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That brings us to the subject of the proposed driverless car, a topic on which I have opined previously.

A recent article in the Wall Street Journal notes that, “Between now and 2016, an increasing number of car makers will offer ‘traffic jam assist’ systems that take over braking, steering and acceleration for vehicles inching along in low-speed traffic. It is a far cry from Google Inc.’s vision for a car that can drive itself in all conditions, but auto makers and suppliers have long taken the view that quantum leaps typically take place one mile at a time.

At first, this seems like a very appealing concept. I was recently stuck in a monster traffic jam on Interstate 95 in South Carolina, and I certainly could have saved a great deal of effort and aggravation over the hour or so that we crawled along if my car simply took over all the stops and starts while I grabbed a nap.

But I also remember that during this mind numbing event there were several times when people, including children, got out of their cars to walk around on the roadway.

Common sense and true concern for the safety of drivers demand that we strike a balance between technology that reduces risk and gadgets that actually increase the danger by removing responsibility and accountability.

Would my “traffic jam assist” recognize that potential hazard? And would the software alert me when the road was clear again? One wonders.

Auto industry executives, the Journal says, intend to offer systems that can robotically pilot a car at speeds up to 40 miles per hour within the next five years or so.

“Meanwhile, federal safety regulators say they are still conducting research on the potential safety and benefits of autonomous technology.”

Well done, regulators. Any technology that substitutes itself for the alertness and judgment needed from a human driver is risky by definition.

Ask yourself how many times your own computer fails to work quickly — or just quits working, necessitating a reboot or some other fix. Most of us have come to accept these glitches as a fact of life, but motoring down the road at 40 mph (and I’m sure it will be faster as time goes on), there would be no time for a reboot.

As I noted in my previous writings on this subject, accidents involving the inevitable failure (even if it is only occasional) of such technology could be a nightmare for insurers who need to assign risk and pay claims.

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Certainly, technology that automatically brakes before my car can smash into anything is a potential lifesaver. The real danger is from technology that allows or encourages human drivers to stop paying attention, because the human brain understands things about risk that a computer chip may not.

Common sense and true concern for the safety of drivers demand that we strike a balance between technology that reduces risk and gadgets that actually increase the danger by removing responsibility and accountability.

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Cyber Risks

Banks Face New Threat

Mobile device cyber protections need to be as strong as any other type.
By: | September 15, 2014 • 3 min read
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Banks have been caught off guard by what experts say is the first major mobile banking security threat to hit the United States.

It is a modification of the mobile Trojan called Svpeng, which has been used to steal money from Russian mobile bank accounts, said Dmitry Bestuzhev, head of the global research and analysis team, Latin America, at Kaspersky Lab, the Woburn, Mass.-based antivirus software company that discovered the malware.

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The malware, which emanates from Russia, has been termed “ransomware,” because the hackers demand payment in exchange for not destroying the victim’s reputation, claiming there is child pornography and other prohibited content on the cell phone.

“It takes a picture of the victim and then says it will send it with the child pornography findings to all of the victim’s contacts,” Bestuzhev said.

“Nobody wants to be a victim of such reputation damage.”

This new malware is deeply integrated and is almost impossible to remove from an infected device, he added.

Better software is needed to protect against malware, said Chris Keegan, a managing director at Beecher Carlson in New York.

For now, banks rely on warning their customers against social engineering attempts by fraudsters, and usually that means, “Don’t press the button or answer the email.” Banks must warn their customers not to download any applications not found on verified websites, he said.

Banks Ran Out of Time

Avivah Litan, a Gartner Inc. vice president and analyst in Potomac, Md., said the malware should serve as a wake-up call for many banks, as a fair number of them have not developed security measures for mobile banking that are as robust as those used in online banking.

Ensuring that customers use secured browsers doesn’t apply when they use mobile apps.

Giants like Chase Bank, U.S. Bank and others are developing tougher measures specific to mobile, but the industry as a whole needs to step it up, Litan said.

“They’ve just been slow to put measures in place specific to mobile because there hasn’t been any mobile malware,” she said. “Everybody knew it was coming, but they thought they had more time.”

Matt Krogstad, head of mobile banking at Bank of the West in San Francisco, said the bank’s fraud prevention department works with his department to combat mobile malware and other types of mobile banking fraud.

“It’s an ongoing process since the mobile security space is constantly evolving,” Krogstad said.

Bank of the West diligently educates customers about the latest threats, Krogstad said. In cases like Heartbleed, communications to customers were to reassure them that the bank had done its due diligence to ensure that their accounts were safe.

“With other malware like this randomware, it’s more about reinforcing certain behaviors, such as not downloading apps from unofficial app stores or not clicking on links from people you don’t know,” he said. “Don’t jailbreak your phone or put your banking passwords in your contacts.”

Continuing Challenges

Keeping up with all types of cyber crime continues to challenge the industry. Indeed, computer crime and malicious codes rank as No. 5 as a top risk for banks, according to Aon’s “2014 U.S. Industry Report: Financial Institutions.”

However, there is a disconnect at most banks that hampers risk mitigation, said Michael O’Connell, managing director, financial institutions practice at Aon Risk Solutions.

The disconnect occurs because one group traditionally is responsible for purchasing insurance, while another group is responsible for assessing exposures, including technology that may pose an operational enterprise risk, said O’Connell.

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“We strongly recommend linking the two groups together, to assess ‘what-if’ scenarios and develop mitigation strategies that include insurance,” he said.

Kevin Kalinich, Aon’s global practice leader for cyber/network risk, said that recent court decisions have ruled that if fraudsters are able to steal customer identities or money, it is the bank’s obligation to help their customers, even if the fraud is out of the bank’s control.

“So if a customer gets fooled on their mobile devices, then the bank has the responsibility to monitor usage of their bank accounts,” Kalinich said.

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at riskletters@lrp.com.
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Sponsored: Lexington Insurance

The Re-Invention of American Healthcare

Healthcare industry changes bring risks and opportunities.
By: | September 15, 2014 • 5 min read
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Consolidation among healthcare providers continues at a torrid pace.

A multitude of factors are driving this consolidation, including the Affordable Care Act compliance, growing costs and the ever-greater complexity of health insurance reimbursements. After several years of purchasing individual practices and regional hospital systems, the emergence of the mega-hospital system is now clear.

“Every month, one of our clients is either being bought or buying someone — and the M&A activity shows no signs of slowing down,” said Brenda Osborne, executive vice president at Lexington Insurance Co.

This dramatic change in the landscape of healthcare providers is soon to be matched by equally significant changes in patient behavior. Motivated by growing out-of-pocket costs and empowered with new sources of information, the emergence of a “healthcare consumer” is on the horizon.

Price, service, reputation and, ultimately, value are soon to be important factors for patients making healthcare decisions.

Such significant changes bring with them new and challenging risks.

Physician integration

Although physicians traditionally started their own practices or joined medical groups, the current climate is quite the opposite. Doctors are now seeking out employment by health systems. Wages are guaranteed, hours are more stable, vacations are easier to take, and the burdens of running a business are gone.

“It’s a lot more of a desirable lifestyle, particularly for the younger generation,” said Osborne.

Brenda Osborne discusses the changing healthcare environment and the risks and opportunities to come.

Given the strategic importance of successfully integrating acquired practices into a larger healthcare system, hospitals are rightfully focused on how best to keep doctors happy, motivated and focused on patient safety.

A key issue that many hospitals struggle with is how to provide effective liability insurance for their doctors. Physicians who previously owned their practice are accustomed to a certain type of coverage and they expect that coverage to continue.

Even when operators find comparable liability insurance solutions for their doctors, getting buy-in from their staff is often an additional hurdle to overcome.

“Physicians listen to two things — physician leaders and data,” said Osborne. “That’s why Lexington provides assessments that utilize deep data analysis, combined with providing insights from leading doctors to help explain trends and best practices.

“In addition, utilizing benchmarks against peers helps to identify gaps in best practices. It’s a very powerful approach that speaks to doctors in a way that will help them improve their risk.”

Focusing on the “continuum of care”

There’s been a fundamental shift in how healthcare providers care for patients: Treatment is becoming more focused on a patient’s overall health status and related needs.

SponsoredContent_LexA cancer patient, for example, should have doctors in a number of specialties communicating and working together toward a positive patient outcome. But that means a change in thinking: Physicians need to work collaboratively with one another — not easy for individuals or groups that are used to being independent. Healthcare is a team sport.

“If there isn’t strong communication, strong leadership, and the recognition of proper treatment procedures between physicians, healthcare providers can increase the risk of error,” said Osborne. “The provider has got to treat the whole patient rather than each individual condition.”

That coordination must extend from inpatient to outpatient, especially since the ACA has led to a rapid increase in patients being treated at outpatient clinics, or via home health or telehealth to reduce the cost of inpatient care

“Home health is going be a growing area in the future,” Osborne continued. “Telehealth will become an effective and efficient way of managing and treating patients in their home. A patient might have a nurse come in and help the healthcare provider communicate with a physician through an iPad or computer. The nurse can also convey assessment findings to the physician.”

Metrics matter more than ever

Patients have not always thought of themselves as healthcare consumers, but that’s changing dramatically as they pay more out of pocket for their own healthcare. At the same time, there’s an increase in metrics and data available to the public — and healthcare consumers are drawing upon those metrics more and more when making choices that affect their health.

SponsoredContent_Lexington“Consumers are going to start measuring physicians against physicians, healthcare systems against healthcare systems. That competition will force everyone to improve the quality of care.”
– Brenda Osborne, Executive Vice President, Lexington Insurance

Think about all the research a consumer does before buying a car. Which dealership has the best price? Who provides the best service? Who’s offering the best financing deal?

“Do patients do that with physicians? No,” said Osborne. “Patients choose physicians through referrals from friends or health plans with minimal information. Patients may be putting their lives in the physicians’ hands and not know their track record.

That’s all going to change as patients’ use of data becomes more widespread. There are many web based resources to find information on physicians.

“Consumers are going to start measuring physicians against physicians, healthcare systems against healthcare systems,” said Osborne. “That competition will force everyone to improve the quality of care.”

Effective solutions are driven by expertise and vision

The rapidly evolving healthcare space requires all healthcare providers to find ways to cut costs and focus on patient safety. Lexington Insurance, long known as the leading innovative and nimble specialty insurer, is at the forefront in providing clients cutting-edge tools to help reduce costs and healthcare exposures.

These tools include:

  • Office Practice Risk Assessment: To support clients as they acquire physician practices, Lexington developed an office practice assessment tool which provides a broad, comprehensive evaluation of operational practices that may impact risk. The resulting report, complete with charts, graphs and insights, includes recommendations that can help physicians reduce risk related to such issues as telephone triage, lab results follow-up and medication management. .
  • Best Practice Assessments: High risk clinical areas such as emergency departments (ED) and obstetrics (OB) can benefit significantly from external, objective, evidence-based assessments to identify gaps and assure compliance with best practices. In addition to ED and OB, Lexington can provide a BPA for peri-operative care, prevention of healthcare-acquired infections, and nursing homes. All assessments result in a comprehensive report with recommendations for improvement and resources along with consultative assistance and support. .
  • Continuing Education: In an effort to improve knowledge, decrease potential risk and support healthcare providers in the use the most current tools and techniques, Lexington provides Continuing Medical Education credits at no cost to hospitals or their physicians.
  • Targeting the Healthcare Consumer: With Medicare reimbursement impacted by patient-satisfaction surveys, assuring a positive patient experience is more critical than ever. Lexington helps hospitals understand and improve the patient experience so they can continue to earn the trust of healthcare consumers while preserving their good reputation. .

To learn more about Lexington Insurance’s scope and depth of the patient safety consulting products and services healthcare solutions, interested brokers may visit their website.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Lexington Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

Lexington Insurance Company, an AIG Company, is the leading U.S.-based surplus lines insurer.
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