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Wealth Management

GET SMART TO REDUCE RUNAWAY ESCAPE OF WATER CLAIMS

By Rik Temmink, Chief Product Officer, geo

Leaks and escape of water incidents in homes are so prevalent in the UK that last year, the head of the General Insurance Policy at the Association of British Insurers called for the problem to be addressed as a number one priority for the domestic property insurance market.  Given that claims for escape of water rose by 24% between 2014 and 2016 and that the average value of claims is also rising, this is hardly a surprise.

The extreme weather that we have experienced in recent years, particularly during the ‘Beast from the East’ and Storm Emma last year serves to intensify what is already a major headache for insurers. Following these weather incidents, £194 million was paid to restore the damage caused by burst pipes – the highest amount ever paid by insurers in one quarter.

Whilst research and analysis into the reasons for the increase in escape of water claims and claim values has helped insurers gain a better understanding of the risk factors, it is still an uphill struggle to encourage householders to adopt preventative measures.

Expensive homes, high claims

Claim values are rising because Britain’s homeowners are investing more in expensive fixtures and fittings. The cost of damage and repair to fully-tiled wet rooms, underfloor heating and high-spec shower and bath ‘furniture’ is far greater now than even ten or twenty years ago. In addition,  modern plastic pipes and push-fit fittings are arguably less effective than more traditional copper pipes. When it comes to the rising number of claims, this is likely to be due to the growth in multiple property ownership, with many residences being used as second homes which are often left empty for long periods of time. The risk of frozen or burst pipes, particularly in the cold winter months, is greater, as is the amount of damage that can be caused before the problem is resolved.

Increasingly, however, the insurance industry is introducing a new initiative that will help to prevent escape of water and alert homeowners if an incident does occur. Even better, they will reduce the cost of premiums to incentivise home insurance policy holders if they get involved.

Insurers are partnering with select providers of smart solutions that have been designed to detect leaks and shut off water systems. Our own solution, Waterlock, uses a remote controlled stopcock attached to the mains water supply. Sensors placed around the home will detect standing water or an increase in humidity, automatically activate the valve controller to close the stopcock and send an alert to the homeowner via email or a mobile phone app.

According to a Water Security Survey conducted by The Consumer View in 2017, “only 18% of UK consumers close the mains pipe and the inflow to the washing machine before they go away”. The main reason for this is that stopcocks are out of sight and therefore out of mind, Stopcocks also tend to be in places that are hard to access, and as many as 60% of stopcocks are either require fully seized or extremely hard to turn. Not only can solutions like Waterlock automatically turn off the stopcock, they also allow it to be done quickly, simply and even remotely by the homeowner.

The use of a smart water controller will help to reduce potential damage to a property if there is an escape of water and by preventing a leak, the homeowner is likely to suffer less disruption too. The added benefit is that they will enjoy lower home insurance premiums once they have installed the device. For insurers, the benefit is in a reduction in the number of claims and a lowering of the value of claims because water loss is minimised.

Protecting vulnerable unoccupied properties

Second home owners are an obvious early market for this type of preventative solution. Apart from being left unattended for months at a time putting them at greater risk, these properties attract higher premiums than regular home insurance policies – £800 to £1000 per year instead of approximately £300 and this is a straightforward route to reducing that cost. Households that have previously made escape of water claims are another target. According to a 2017 study from The Consumer View, 54% of households have suffered at least one water damage incident, and insurers understandably regard these as a higher risk.

When insurers and brokers are talking to customers about the benefits of taking preventative measures by using smart solutions, it is not just the cost of repairs that have to be taken into consideration. In a recent case, over a hundred students were forced to move into temporary accommodation when a large leak in a top floor apartment went undetected for days, resulting in a major flood of the building. The financial implications for repairing the damage and housing the students were one issue, but this incident occurred during a busy exam period, so disruption to the students’ lives was also a factor.      

Unless measures are taken now to arrest leaks and prevent escape of water incidents, the number and value of claims will continue to rise. The availability of policies that reward homeowners for installing smart water detection solutions will help to address this difficult issue. It is estimated that using these systems could reduce insurance premiums for householders by as much as 15% and for insurers will result in savings amounting to hundreds of millions of pounds every year. 

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Wealth Management

HOW RESILIENT IS YOUR ORGANISATION’S SECURITY?

Kimon Nicolaides, Digital Services Group Head at MASS

 

Organisational security can be thought of like peeling the layers of an onion – with critical assets sitting in the middle protected by multiple layers, and if one layer is removed or breached, there’s another one underneath. At least that’s the way it should be – too often, however, we see a siloed approach to the different areas of security. In practice, physical, cyber and personnel security can be much more inter-related than many imagine.

The finance sector is arguably one of the more mature in terms of established security measures. However, it’s also vastly diverse, targeted by some of the most advanced threat actors, and one where even the smallest breach has the potential for significant impact, monetarily, or on market reputation, perception or confidence. Security measures should therefore be viewed holistically, led and understood by senior management, otherwise gaps for exploitation will be found by intelligent and experienced people, supported by an ever-growing arsenal of exploitation technology.

Here, we take a closer look at some of the things that comprise a holistic view of security – based on the approach we take with public sector and defence organisations.

 

Physical security

It may seem obvious, but the first layer to assess should be the physical access to your business. For all organisations, this step remains as true today as it ever has been – even for the finance industry where physical security principles have been established over many years.

This stage should go back to the basics of how an intruder could gain access, starting by reviewing the ‘perimeter’ controls. In fact, the first question is, ‘what is the perimeter?’. With the potential for distributed site facilities, linked remote assets, and supply chain dependencies, this simple question needs careful consideration.

Scenario-based analysis, using threat actor personas, motivations and objectives can really help by defining a where a ‘perimeter’ really lies. It’s also an invaluable methodology for exposing how an organisation could be exploited.

This stage should involve a review of physical controls such as fencing, access technology, CCTV coverage etc., including, their role in deterrence and detection of hostile reconnaissance activities.  Disrupting the planning cycle of attacks is often overlooked relative to direct prevention of unauthorised access.

Ultimately, security measures are only as effective as the people that apply them, so an understanding of human behaviours is essential. It’s important to consider how people’s actions affect overall site security and, why these actions occur.

Issues can range from the wearing of security badges in the street through to poor motivation and effectiveness of roving security staff or those monitoring CCTV. Simple and innocent human mistakes could form the seed of future security breaches.

 

Cyber security

The finance sector has progressed its cyber resilience considerably as it’s been dealing with threats for many years. But business sizes now range from the very large to the small and, as new forms of financial transactions evolve, protection becomes more challenging. There is an increased availability of cyber exploitation toolsets and associated managed services and coupled with a reduction in their cost – lowering the financial and technical barriers to advanced cyber-attacks.

This means that cyber security, even for the finance sector, needs to be taken to a new level and existing assumptions continuously challenged.

For example, while penetration testing regimes remain a vital tool in mitigating network cyber risk (including ‘CBEST’ which has been widely rolled out across the finance sector), these still remain a snapshot in time. While they deliver valuable depth of analysis within a network, they are often constrained in breadth of scope and can potentially leave vulnerability blind spots. Very frequent, lighter-touch cyber assessments can fill this gap as they offer a more dynamic view of ongoing vulnerabilities over a wider proportion of the estate, which could represent ‘low hanging fruit’ for the cyber actor. Assessments can be enhanced by applying modern threat intelligence techniques to rapidly identify existing compromises and potential weaknesses (including personnel and corporate digital footprint). This establishes a picture of cyber posture and vulnerabilities before any testing taking place.

Similarly, end-user device security is often viewed in terms of the encryption strength, keys etc.  However, modern methods of fault injection attack (a device’s response to artificially applied ‘fault conditions’ used to derive security credentials), can effectively sidestep assumed security measures, which would normally take decades to ‘crack’ using computer power. So, it makes sense to test a device’s vulnerability to fault injection, rather than assuming encryption alone will protect it.

For this reason, it’s crucial to examine the wider supply chain. In the finance sector, there is high dependence on suppliers of digital telecommunications and energy services, and when different systems are interconnected its challenging to pinpoint cyber resilience risks. Despite this, it’s possible to map complex information to establish risk, by identifying ‘hot-spot’ concentrations of dependencies that represent single-point failures within the complexity of the overall business operation.

 

The insider threat

The potential threat from insiders – those who might misuse their legitimate access to an organisation’s assets for unauthorised purposes – is often overlooked.

This is particularly true for financial businesses, where personal financial gain could be an incentive, or where security controls are so effective that hostile actors must exploit those with legitimate access to circumvent them. You can think of insider threat as the ‘grand master skeleton key’ of security, as there are few security measures that cannot be overcome by the right insider, or team of insiders.  Security compromises involving insiders can also have a disproportionately high business impact.

Yet many organisations consider insider risk to be mitigated simply by pre-employment screening and fail to recognise the spectrum of risks ranging from genuine human error, through to orchestrated insider activity by paid professionals. Insider cases frequently involve individuals who have been with an organisation for some years and have had some personal vulnerability exploited or exposed, or simply become disgruntled.

It’s a broad area to address. Internal governance, security culture, employee wellbeing, employment measures, corporate digital footprint, and perceived employee sentiment are some of the aspects that should be considered. When you have understood this for your own organisation, you should make the same assessment of your supply chain.

If the business is committed, it’s possible to use structured analytical methods to quantify your organisation’s maturity and assess where the key vulnerabilities and risks could lie. This understanding paves the way for improvement, and even small changes can make a big difference.

 

The hidden layers

Like an onion, there are hidden layers to security that may be overlooked so it’s important to consider physical, cyber and personnel security collectively, and to understand the dependencies you have as a business.

For example, your own environment may be protected, but if data is shared with your suppliers or partners, is it still secure? Similarly, if a supplier or partner has a security breach, what does it mean for your operation, your business continuity and your customers?

When assessing security measures, it’s essential to go an extra layer deeper and consider how a range of factors could impact your organisation and its readiness to respond to an incident.

At MASS, our security experts consist of professionals with extensive experience in preventing security breaches and performing assessments in accordance with Ministry of Defence processes, so that we can ensure our security analysis meets and exceeds industry best practice.

For more information, please visit: https://www.mass.co.uk/what-we-do/cyber-security/cyber-security-training/

 

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Wealth Management

HOW TO CATCH UP ON YOUR RETIREMENT SAVINGS

By Gerard Visser, Certified Financial Planner at Alexander Forbes

For many South Africans who were already finding it difficult to save for retirement, Covid-19 has created additional financial pressures which may take years to overcome.

If you stopped contributions to your retirement annuity, or took a payment holiday on your pension or provident fund, you might be worried about the shortfall created, and how you’re going to catch up.

Stop worrying and take action to avoid retiring with insufficient funds. There are many ways to contribute to your retirement, from employer and employee contributions to pension or provident fund, monthly contributions to a Retirement Annuity or a tax free savings account.

With many people having a reduced income due to the economic ramifications of Covid-19, it might be impossible to contribute a large monthly amount to catch up while having concerns such as debt to pay, but I recommend starting with your budget. This will aid you not only by freeing up extra funds to catch up your retirement contributions with, but could also create some peace of mind with an opportunity to pay debts off faster or save some discretionary money.

Gerard Visser

There are many reasons why it is important to follow a monthly budget. Besides reducing stress levels by keeping an eye on your spending habits, it also allows you to track your debts, finding opportunities to top up emergency funds or save extra towards your retirement. A budget goes hand-in-hand with setting and achieving financial goals.

A budget does create an additional administrative burden and requires time to update. I have my budget on an Excel spreadsheet and update it monthly when making EFT payments.

Costs for entertainment, groceries and petrol are variable in nature and change each month. You might end up not using all the funds set aside for these variable costs. Adding these leftover funds at the end of the month to your savings is a good habit to inculcate. The immediate impact might seem small but over time will make a positive outcome to both your retirement and the development of a savings mind-set.

When you are able to free up some money each month, start automating your savings. Instead of having a variable amount go towards savings, set up an automatic contribution, where you “pay yourself first”. Set up an automatic debit for your retirement savings and you’ll grow these funds without having to think about it.

One of the most important decisions you can take to help make your retirement comfortable is preserving your retirement funds when changing employer.

When starting new employment or if you are coming out of a payment holiday, try matching your employer’s monthly contribution toward your pension or provident fund, or if on a total cost to company structure, start on the maximum employee contribution percentage. By doing this as well as automating your savings, you get use to contributing those amounts and could potentially have a larger nest egg at retirement.

Remember that life happens, and your budget might come under strain – many of us have experienced this during the pandemic. If you have been going through a difficult financial time, it is time to reassess and ask yourself, what in your budget is necessary and what is actually a luxury?

It is never too late to start sorting out your finances, but the earlier you start, the better, and more achievable, the outcome will be.

 

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