What I didn't anticipate was Carlos eating my entire DVDcollection, destroying my laundry room twice, and eatingan entire week's supply of Keurig K Cups. That was just the firstmonth.

Carlos ate her food . . . and pretty much everything else in thehouse. Then, she dug up my in-ground sprinklers. Seeing Carlospulling at a 20-foot section of sprinkler pipe was quite asurprise, but such is life.

We plan, we anticipate, but life and circumstances dictate whatreally happens. This is what I call the "Carlos Factor."

Now, how does the "Carlos Factor" translate to insurance, riskmanagement, and claims? In businesses we anticipate, we plan, andwe safeguard, but there are always pitfalls. There are alwaysthings for which we don't prepare.

For example, the promulgation and widespread implementation ofsolar power creates some of those interesting and potentiallyunforeseen risks associated with its design, manufacture,installation, and distribution.

Large power purchase agreements (PPAs) allow energy customers toforgo daunting upfront costs by providing power (generated cheaplyvia photovoltaic cells), without the need to purchase theequipment. The reliance on such power and a failure of the "grid"could lead to a catastrophic loss. As PPAs gather steam (ironyintended) and companies offering this technology (like TiogaEnergy) continue to gain market share, the associated risk andexposure grow exponentially.

No longer will power outages be one of those situations whereone business or one entity is impacted. We must now anticipate apotential catastrophic cascade failure that could create a "supersolar loss" attributable to those unpredicted "Carlos Factors."There are always "Carlos Factors."

Chinks in the Armor

As with any nascent technology, there are weak links or chinksin the armor. The obvious failure is that of the actual mechanism.Discreet losses must be carefully considered when analyzing therisks associated with this type of venture; for instance, considertertiary loss due to exposure to volatile chemicals duringmanufacture, height-related installation risks, collapse due torooftop installation, water damage due to interrupted drainage,wind damage, and various forms of intellectual propertyexposures.

This is just one example of how invention and adaptation of newand more progressive technologies will eventually lead to races to thecourthouse and/or the patent office by creative plaintiff'sattorneys or various competing companies, intent on establishingrights to a given technology. Companies realizing the large amountsof money at stake if they do not control proprietary rights to asaid technology will be willing to make "bet the company" decisionsand engage in full-blown slash and burn litigation.

Depending on the manner in which these suits are plead, validcoverage triggers may exist and create huge potential exposures byway of defense costs and possibly, indemnification exposure.

Such exposures must be a significant consideration in theoverall assessment of a given risk. Insurers must reactaccordingly, and provide for such exigencies in the underwritingand claim arenas.

Anticipating the risks allows you to properly tailor insurancecoverage to the situation. In the above instance a variety ofcoverage policies would likely be appropriate, including generalliability, professional liability, directors and officers (D&O)coverage, as well as a cyber insurance policy.

How would a cyber policy come into play? An example: asignificant and growing risk in the energy world is the shifttoward wireless meter reading. These meters present thousands uponthousands of potential access points from which to gatherinformation, or gain entry to a company's electronicinfrastructure. While there may not be a direct network link to aninternal system, the systems used to access information (the meterreadings) could capture (either with intent or accidentally)personal private information via unsecured wireless networks. Thiscould be a significant and unforeseen exposure.

You may recall several months ago the Google Street View carsinadvertently gathered personal, private information such aspasswords, e-mail addresses, and so on. This information wasgathered by the data collection mechanism on the Street View cars.A similar, if not identical situation could arise with thecollection of water/power meter data via the drive-bycollections.

In such cases, not only would the entity face direct actions bythe consumers, but it could also be looking at severe regulatoryactions leading to fines, sanctions, and significant defensecosts.

As far as risks go, I've figured Carlos out. Even though I knowher ways and what to watch for, she will always surprise me. Shewill always find some new ways to push the edge and expand the"Carlos factor." Knowing that, I can be diligent; I can be onguard; and I can account for a portion of the unexpected andsurprising behavior.

We all must constantly account for the "Carlos Factor," andconduct a creative and thorough analysis of insureds' potentialrisks to ensure that the appropriate insurance, limits, anddeductibles are in place. No surprises.