Webinar: Foreign Acquisition Risks – Be Prepared
Our increasingly global economy has forced the majority of organizations to look beyond their domestic borders for growth opportunities. But building a presence in a foreign market from scratch can take years. International acquisitions are the most effective way to ramp up a presence quickly, tapping into an existing network of clients and suppliers in a new market.
Managing the risks of foreign acquisitions can be tricky business. Language barriers, cultural differences, local politics, technological incompatibilities and regulatory compliance issues can turn a lucrative deal into a disaster. The grim reality is that many mergers fail to deliver upon the goals they were intended to achieve.
Meticulous planning and preparation are the best way to mitigate the risks of foreign mergers and acquisitions. This webinar will focus on the challenges of entering new business climates and the communication strategies needed to help local stakeholders and newly acquired employees understand your corporate risk management philosophy.
In this webinar, sponsored by The National Alliance for Insurance Education & Research, expert panelists will discuss these topics and issues related to foreign acquisitions:
- Assessing cross-border uncertainties. A discussion of techniques or protocols for evaluating cross-border risk, pricing it and possibly transferring it.
- The use of captives. The use of captives in managing foreign acquisition risk is attracting growing attention from the risk management community. This discussion will address which cross-border risks are best housed in captives and how those captives should be managed.
- Problem venues. This aspect of the webinar will look at which venues, though attractive from a business opportunity standpoint, require extra vigilance on the part of risk managers.
- Local paper. Local paper is a requirement in some geographies but not in others. The panelists will discuss the use of local paper and other insurance issues that business executives operating in foreign countries need to be aware of.
Space is limited, so register today!
It’s the stuff of futuristic daydreams. Implantable sensors that can detect signs of a potential health problem and send alerts to your smartphone, like a “check engine” light for your body. A straight-out-of-Star-Trek handheld medical scanner you can use to diagnose your own problems and alert your physician. A capsule-shaped sensor you can swallow so your doctor can perform your annual physical via phone or tablet, even while you’re at work or — better still — out on the links.
Only these aren’t daydreams at all. These are just a small sampling of the health care innovations that will be market-ready in the near future. Health-related mobile apps are booming as well, growing at a rate of 25 percent a year.
These technologies will become a part of the increasingly interconnected environment of health care devices, which already includes common technology such as radiology equipment, dialysis machines and the smartphone in the pocket of every practitioner.
The Looming Cloud
The Internet of (medical) Things is part of the push toward modern, patient-focused health care. It is at the core of the telemedicine movement and it is poised to expand access to care at a crucial point in the evolution of health care reform. But there is an ominous cloud hanging over all of this progress.
Health care systems are under siege like never before. Experts report a worsening trend in the frequency and complexity of cyber attacks on health care networks, with a sharp increase over the past year.
“The advanced persistent threats that we’ve been fighting on behalf of our clients in government and defense for the past five years have now shifted into the health care arena,” said Tom Patterson, director of global cybersecurity consulting with CSC.
“Companies are being targeted; adversaries are spending more than a year breaking in, escalating their privileges, looking around, customizing specific malware to defeat their specific defenses, and then either exfiltrating data or doing the damage they wanted to do. That type of attack is light years ahead of most health care companies’ defenses.”
A report published in February by the SANS Institute painted an overwhelmingly dire picture of cyber threats in health care. Between September 2012 and October 2013, researchers identified 375 U.S. health care organizations that were compromised — many of whom are still unaware that they’ve been compromised. HIPAA and the HITECH Act forced health care organizations to take comprehensive measures to protect patient data or face heavy fines. The trouble is that compliance doesn’t necessarily equal security, and systems unrelated to protected health information (PHI) are getting less attention.
The SANS study found that hackers were infiltrating devices such as radiology imaging software, conferencing systems, printers, Web cameras and mail servers. With each new device and application connected to health care networks, security experts warn, a new window opens for hackers to exploit, widening the available attack surface.
“There are two types of companies, those that have been hacked, and those that don’t know they’ve been hacked,” said Kurtis Suhs, vice president and national technology and privacy product manager for Ironshore.
Unfortunately, the ones that don’t know about it yet could be in deeper trouble than they could ever imagine.
While much ado is made of the cost of data breaches in the retail sector, the impact of a disruption to the health care delivery system could be far more chilling. Imagine hackers taking control of the life-support devices in every critical care unit of a 25-hospital health care system. Imagine if they could gain control of every medication-delivery pump in the network, delivering lethal doses to dozens of patients.
What if malware from a random smartphone could infect every diagnostic device across the network, scrambling readings and making it impossible for doctors to treat patients? These scenarios are already possible — more possible than most would care to think about.
“The health care ecosystem is one of the most critical infrastructures for any country,” said Andrea Fiumicelli, vice president and general manager of healthcare and life sciences for CSC. “Preventing health care delivery from working for even a few hours could have a massive impact on a national level.”
“Both terrorist groups and hacktivist groups spend a lot of time trying to disrupt other parts of critical infrastructure,” added CSC’s Patterson, “but the easier it becomes to disrupt the actual health of the target humans, the more we’re going to see them slipping into that arena as well.”
The ability to commandeer medical devices makes health care systems a prime target for extortionists as well, experts said.
Video: This Technology Outlook 2020 looks at global megatrends and technologies affecting the health care sector.
Beth Berger, national director of Arthur J. Gallagher’s health care practice, used the example of how equipment servicing can be done
remotely via Internet-based diagnostics.
“What if somebody hacked into that and recalibrated [equipment] … ? What if I told this hospital that unless you wire me X amount of dollars, I can shut down the life support on all the people in your hospital? And let me show you for two minutes.”
The prevailing opinion among experts is that the health care industry lags far behind most other industries in terms of making real improvements to cyber security. However, it’s fairly easy to understand why.
“You really have to have empathy for health care providers these days,” said Katherine Keefe, breach response services director for the Beazley Group.
“They’re facing so many changes and cyber is just one of them. They’ve got dwindling reimbursements, changing payment methodologies, increased regulation and heightened expectations about providing care to more people who [now] have insurance under the health reform act. … I feel like we just have to help them.”
Help is coming, albeit slowly. CSC’s Patterson said the FDA is moving toward classifying certain medical devices as industrial control (IC) devices, which will subject them to stringent security controls.
Meanwhile several web-based medical apps and programs are getting certified by Underwriters Laboratories, according to Dr. Bill Bithoney, senior adviser at BDO Consulting and a member of the health care practice.
But health care organizations need to look inward and start changing the way they think about cyber security, beginning with the way they think about the growing network of peer-to-peer devices.
“Everything is going to be connected in the health care space very quickly and it’s going to come from multiple different vendors,” said Patterson. “It’s all going to start talking to each other on its own. … The health providers aren’t necessarily going to have a single point of control for all these devices. So if you don’t have a security scheme that takes that into account, you’re at real risk.”
“Years ago, it was all about perimeter security,” said Ironshore’s Suhs. “It was, ‘You’ve got to buy our firewall and antivirus to prevent the bad things from happening.’
“The security paradigm has changed today. I don’t think there’s a way you can prevent a data breach.
“It’s a matter of how do you detect it. Those that can quickly detect are those that can probably cost contain the breach in an effective way. … From an underwriting standpoint, that’s the paradigm I have.”
Kevin Kalinich, cyberrisk global practice leader for Aon Risk Solutions, warned against trying to solve the problem by throwing more money at IT.
Before deciding on a strategy, health care entities would be well served to take an enterprise risk management approach to protecting their systems, he said.
Organizations must ask themselves, “How do we check in the patient? How do we collect their information? How do we decide who has access to patient information?” Armed with a better understanding of how the system works together as a whole, then they can begin to identify their vulnerabilities.
“It’s crucial to balance IT security with appropriate policies and procedures,” said Kalinich. “It’s about knowing what you should be doing and what you should not be doing with Internet-connected medical devices. Each department needs to be on the same page about what they should be doing and that includes their third-party providers. It’s a culture issue.
“Insurance and cyber security go hand in hand,” he added. “The underwriters will give you more comprehensive coverage for a cheaper price if you have good ERM.”
Patterson added that insurance companies also need to look inward, and think about creating cyber products that deliver real value to insureds.
“Cyber insurance hasn’t been tied to real security — it’s always been actuarially based.
“What I want to see the industry evolve to is, ‘Here’s the probability of this happening. So if you take these tangible steps, it will make you more secure, so the probability goes down, so your risk goes down, your insurance [premium] goes down.’ It becomes much more of a useful policy,” he said.
“That makes all the sense in the world and I think that’s what companies would love to buy today if they believed in it,” Patterson said.
Beazley’s Keefe agreed.
“The folks in the markets who can deliver solutions that make sense and add value and really make a difference are the ones that will be the leaders.”
Complete coverage on the inevitable cyber threat:
Risk managers are waking up to the reality that the cyber risk landscape has changed.
Cyber: The New CAT. It’s not a matter of if, but when. Cyber risk is a foundation-level exposure that must be viewed with the same gravity as a company’s property, liability or workers’ comp risks.
Disabled Autos. It’s alarmingly easy for a hacker to take control of a driverless vehicle, tampering with braking systems or scrambling the GPS.
Unmanned Risk. The dark side of remote-controlled drones, which have already been hacked — by students.
An Electrifying Threat. There is a very real possibility hackers could devastate the nation’s power grids — for a potentially extended period of time.
Passionate About Technology
If you overheard the passion and enthusiasm that Brit Waters uses to describe his most important business technology, you would immediately assume it was the latest smartphone or tablet. But it’s not Apple or Google that generates so much enthusiasm, it’s the Riskonnect risk management platform.
“Riskonnect revolutionized how our department does business. This system changed the way we gather, analyze and communicate information. It’s made us more efficient, effective and reliable,” said Waters, Manager, Risk Management at Avery Dennison Corporation. “These are not bandages, but complete solutions.”
Avery Dennison is a multinational company offering labeling and packaging materials and solutions whose applications and technologies are an integral part of products used in every major market and industry. The company operates in more than 50 countries with over 26,000 employees and $6 billion in revenues in 2013.
“Riskonnect revolutionized how our department does business. This system changed the way we gather, analyze and communicate information. It’s made us more efficient, effective and reliable. These are not bandages, but complete solutions.”
– Brit Waters, Manager, Risk Management, Avery Dennison Corporation
The company partnered with Riskonnect, the provider of premier, enterprise-class technology platforms. In just 18 months, the system not only revolutionized the department but also delivered wide-ranging value for plenty of other parts of the organization. Those departments utilize the system to manage financial assets, keep track of vehicles and will soon oversee facilities requests.
‘The Simplicity is Unreal’
For global property insurance renewals, Riskonnect changed the way Avery Dennison collects data on its 300 manufacturing facilities, warehouses and other properties around the world. Gone are the days of sorting through hundreds of separate emails with information about the properties and merging hundreds of separate spreadsheets into one.
Not only was the old process cumbersome, it left lots of room for error.
With Riskonnect, the process is automated. It sends emails to the more than 100 individual contacts and the users insert the information into the Riskonnect portal themselves — something that makes Waters’ life a whole lot easier.
“I hit a button once and it runs the report for me. The simplicity is unreal,” he said. “Plus, it gives us better information that we can communicate to our insurance carriers, and gives them increased confidence about the risks they’re insuring.”
Waters said it’s a big time-saver. “Before, the process could take up to three months, and now we get it done in less than a month.”
One thing he’s particularly excited about is the configurability of the portal. If he wants to customize it, he can easily do so without going through a computer programmer or contacting an account executive.
“It gives you the power to set up the system as you need it, not as someone else envisions you need it,” said Waters.
The Riskonnect portal is also the primary source for reporting workers’ compensation claims. Again, the Riskonnect system simplified the process. Before, employees had to call a 1-800 number or fill out a long form and fax it to the Third Party Claims Administrator (TPA). Now they just log on and use the claims reporting portal, which is equipped with drop-down menus and other efficiencies that help expedite the process.
“We take the guessing game out of their hands,” said Waters. “In a matter of minutes, they get a confirmation email that the claim has been submitted to the TPA.”
Through the Riskonnect dashboard tools, Waters and his department can learn a lot about trends in workers’ comp claims. The system tracks claims year-to-date, costs, causes of injury and even the top body parts that are hurt. Then risk management communicates that information to local managers to make sure that safety-and-prevention programs are appropriate and will help reduce the amount of claims and their costs.
“The Riskonnect dashboards layout all this valuable information in easy-to-use tables and charts, making it simple for us to study the data and implement necessary safety changes,” said Waters.
ROI on a Values Collection Module
At the start of the process, Waters never imagined just how many other departments would use the tool. The finance department uses the system for asset management. The fleet administrator uses it to have drivers sign off on its manuals. Even the facilities department is jumping on board, using the Riskonnect system to identify when properties need repairs to big-ticket items like roofs or windows.
The company is also looking to report global property claims, transit claims and employers’ liability claims through the platform. It’s even evaluating if it can use it on the shop floor with health-and-safety team members having easy access to the system via iPads.
”The Riskonnect platform can help many different departments with a wide variety of tasks,” said Waters. “It’s really making risk management a much more strategic contributor to the company.”
“I hit a button once and it runs the report for me. The simplicity is unreal,” Waters said. “Plus, it gives us better information that we can communicate to our insurance carriers, and gives them increased confidence about the risks they’re insuring. Before, the process could take up to three months, and now we get it done in less than a month.”
Waters’ enthusiasm for the product is clear, but he’s not alone. End-users are raving about how easy, intuitive and customizable it is. For example, training end-users used to consist of holding approximately 15 different webinars to walk everyone through the process. Now, it’s accomplished in one easy-to-understand mass communication through the Riskonnect portal.
The end users even helped Waters and the Avery Dennison team add efficiencies that improve the entire process. On the property reporting side, they suggested adding an attachment tool for adding spreadsheets – so the information is easy to find the following year.
“It’s amazing when you give the end users a product and you see how they come back to you with advice that you never even thought of,” said Waters. “That speaks volumes for the system.”
In just 18 months, Riskonnect changed the way Avery Dennison does business — something Waters can’t hide his enthusiasm about.
“I don’t consider them just a vendor,” said Waters. “I consider them a long-term strategic partner.”