Academic journal article Journal of Risk and Insurance

E-Risk: Liabilities in a Wired World

Academic journal article Journal of Risk and Insurance

E-Risk: Liabilities in a Wired World

Article excerpt

e-Risk: Liabilities in a Wired World, by Scott Lange, Julie Davis, Daniel Jaye, Dan Erwin, James Mullarney, Leo Clarke, and Martin C. Loesch, 2000, Cincinnati, Ohio: The National Underwriter Company.

This text examines six broad topics of importance to managers and business professionals, with particular value for those responsible for organizational risk management. It begins by reminding readers of the rapid nature of change in contemporary Western civilization and the opportunity for economic growth that developed nations are enjoying. Readers learn that the microprocessor is the tool that has enabled rapid acceleration of change in our environment by facilitating access to information and knowledge. We are reminded of the way that Western culture values its intellectual assets as potentially more important than our tangible assets. This text focuses on the importance the Internet has in the distribution of and access to intellectual assets. While technology accelerates the development of and value given to intellectual assets, it exponentially expands and redefines the risk that must be identified, analyzed, quantified, and managed. The text addresses fundamental areas of concern for those who must respond to the increasing value and vulnerability of our intellectual property. Six chapters present essays on the following:

1. an overview of states of maximum change

2. emerging versus traditional liabilities

3. implications of intellectual property

4. privacy issues

5. security management

6. quantification challenges

The authors are risk management practitioners. We learn of their frustrations and successes as they deal with varying levels of understanding for the complexities of managing e-risk.

Lange was director of risk management for Microsoft Corp. from 1990 until his retirement in 1998. During his years with Microsoft, he elevated the role of risk management from a functional role to a level of involvement throughout the organization (enterprise risk management). In this book's introductory chapter, he describes a world in which businesses are dependent on the technology that enables accelerated product design and life cycles. He contextualizes the expectations of Wall Street investors within the accelerated technology of business. Given the rapid increase in productivity that is possible with evolving technology, the growing expectation of investors, and the increasing dependency on technology by businesses, it is easy to understand the author's sense of urgency for adopting enterprise e-risk management practices.

While those who hold responsible positions in today's technology-driven organizations do not need to read this chapter to appreciate the need for managing technology risk, this opening to the book is valuable for the wider audience of business students and nonprofessionals who may not appreciate the magnitude of this dependency. In addition to emphasizing the concerns of dependency and velocity of change, the author describes issues of bad or ineffective technology and the effects of underperformance. He also discusses the impact of connectivity, hardware breakdowns, and intellectual property issues such as the problems of preserving brand equity, identifying fraud, and impersonation, and 20 other e-risk concerns. This chapter provides good material to raise the awareness of senior executives for the importance of enterprise e-risk management practices.

Leo Clarke and Martin Loesch are partners in a law firm that specializes in technology legal issues. Most of business's commercial code has its roots in responding to property rights and liability issues grounded in the production and use of tangible property and the consequences of such production and product use. Consequently, students of e-risk should have an introduction to some of the legal issues surrounding the increasing intangibility of business property. …

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