Magazine article Risk Management

EDP and Risks

Magazine article Risk Management

EDP and Risks

Article excerpt

When it comes to protecting EDP systems, risk managers should emphasize loss prevention techniques, states Gary Baxter, assistant director of insurance for Weyerhaeuser Company and chair of the 1992 Western Regional Conference. "For EDP systems, loss prevention is the number one priority; insurance comes second, and should only be used for catastrophic losses."

Mr. Baxter suggests that risk managers should apply some of the basic concepts of risk management to protect their companies' EDP systems from loss. "Identifying the risks is the first technique to use," he says. "In this case, the risks are any events such as a fire, flood or earthquake that could physically harm the computer systems." This step also entails determining how important the EDP system is to the company's overall operations. "You should develop a worst-scenario such as a breakdown of the system," declares Mr. Baxter. "This will allow you to see if the company could survive an EDP breakdown, and if not, what steps need to be taken to protect the system."

Eliminating or controlling potential risks constitutes the second risk management technique to use in EDP protection. "Studies by Factory Mutual Research Corporation demonstrate that electrical problems such as power shorts and surges are responsible for 50 percent of computer losses," says Mr. Baxter. "However, fires cause the greatest amount of loss in terms of dollars." Consequently, risk managers should take steps that will protect EDP systems from losses arising from these two sources. …

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