Firms Still Clueless About BI Exposure Threats
Despite 9/11 example, most buyers ignore potential for shutdown, lawyer says
Businesses across the country have not taken some of the lessons of Sept. 11, 2001 to heart, an attorney involved in several 9/11-related business interruption disputes contends.
"Have firms changed their BI coverage since 9/11? They should have, and they should be talking to people who know how to read policies and know what the courts are going to do, and look at the implications of their BI coverage in view of 9/11," according to Mark Bunim, a partner and member of the insurance and risk management practice at the law firm of Bryan Cave LLP in New York.
"The reality is they are not doing it," he said. "Outside of Manhattan, people dont think its a concern. I hate to say this, but the attitude is, 'Its not going to happen here. Its a New York problem."
Companies such as Microsoft are aware that they may be a terrorist target, he noted. "They have duplicates of information and programs off site. But other companies are not thinking about this," he said.
He added that one clienta large telecommunications company based in the Midwestwas concerned about its telecommunications functions working in New York and other large cities should there be another 9/11-style terrorist attack, but the company had not planned for such an event at its own headquarters.
Business continuity planning, he said, is essential for all businesses no matter where they are located.
Mr. Bunim said there are two levels of concerns, with employees being at the top of the list. The second concern is business continuity, which would include storing information offsite as well as information backup.
"I cant begin to tell you how many businesses that I represented that used to be housed in the World Trade Center lost their documentation," he said. One of those companies was "one of the biggest insurance brokers in the world, that lost everything and they had no backup," he noted. "Things were not scanned and things were in paper formatyou know what happened, the buildings fell and the papers were gone."
Businesses need to be thinking about scanning documents, he said, noting that "scanning is crucial so that it can be kept offsite in an electronic format."
The key question he asks of clients, he said, is "if youre closed down for five days, will you be closed down forever? When people start thinking about that and giving it serious consideration, thats when they start business continuity planning."
He emphasized that insurance buyers need to be careful when buying business interruption coverage. "You should see if it really applies, what are the loopholes in the coverage, and how those loopholes should be addressed," he said.
The key is "sitting down and reviewing it with professionals," he added, cautioning that not all brokers are qualified to address coverage language issues.
Reproduced from National Underwriter Edition, September 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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