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[ Contents ] FOCUS: INSURANCE LAW REFORM 22 Time to talk: The reform of disclosure and warranty rules signals the end for passive underwriting, writes Paul Lowin, but that is no bad thing for insurers, brokers and their clients as long as they are prepared to work together 24 Out of the grey: Should insurers be able to avoid Ltd contracts in cases where the insured has not provided a completely accurate picture of the risk underwritten? Crossrail by This is a point for debate in the latest round of insurance law reform proposals COVER STORY 14 Image Crossrail: A head for risk 27 EMERGENCY & MASS NOTIFICATION SOFTWARE REPORT REGULARS 5 Editorial comment 6 Analysis 7 Book reviews 8 News in brief: A round-up of industry news 11 Appointments: Industry moves 12 The interview: IBM’s Chris McBrayne 28 Spread the word: Deborah Ritchie examines 64 Executive summary: The latest report in a nutshell developments and challenges in the mass 65 Industry views: Airmic, Alarm, IOR & IRM notification market 66 Diary: Your guide to upcoming events 32 A selection of key market products 68 Market guide: Industry products and services 42 A matrix of product functionalities 49 Business Continuity Awards EDITORIAL & FEATURES 61 Risk Management Awards 14 Going underground: Europe’s largest ever single civil engineering project, Crossrail carries just as much risk as it does opportunity. Trevor Morton gets to grips with its ERM approach to dealing with those risks 18 Paradox of thrift: What impact has the recession had on continuity and recovery spend? Have these 8,500 average net circulation for the tough times led companies to spend more to protect period 1st July 09 to 30th June 10 what they have, or less, as belts tighten? 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Controll-IT GmbH | Stresemannstr. 342 | D-22761 Hamburg Fon: +49 (0)40-890 664 60 | www.controll-it.de | info @controll-it.de News & Analysis l Editorial l Features Editorial comment [ ] Editor Deborah Ritchie [email protected] Tel: +44(0)20 7562 2412 Fax: +44(0)20 7374 2701 Associate publisher Graeme McQueen s this issue goes to press, [email protected] Crossrail marked a major Tel: +44(0)20 7562 2434 A Fax: +44(0)20 7374 2701 milestone in the construction of London’s new rail line with the lowering of a 550 tonne Design & Production Matt Mills tunnelling machine into a 40 metre deep shaft in east London, ahead of the start of tunnelling for Crossrail’s Tel: +44(0)20 7562 2406 Fax: +44(0)20 7374 2701 eastern section. The delicate operation required one of the largest cranes in Europe to lift the equivalent of 280 Managing director John Woods London taxis. Crossrail began building its first tunnel in May of this year, and eight tunnelling machines Publishing director Mark Evans will construct a total of 21 kilometres of twin tunnels under London. Contributing writers David Adams The scale of the commercial and technical risk of Jim Burtles this project is enormous. Tunnelling on such a scale, Paul Lowin Trevor Morton let alone under the capital city, is not without risk, as Helen Yates recent history shows. It is only 18 years since London Circulation & subscriptions Heathrow narrowly avoided catastrophe. In October Joel Whitefoot 1994, a major construction project to build the Heathrow [email protected] Express was halted when a tunnel under construction Subscription rates collapsed. Miraculously, no one was hurt. The following £189 p.a. in the UK £199 p.a. in the EU 48 hours saw the collapse of two further tunnels bringing £209 p.a. elsewhere Heathrow Terminals 1, 2 and 3 near to the brink of closure. The resulting costs were estimated at around Cheques must be made payable to Perspective Publishing Limited and £15m. The collapse at Heathrow is on record as one of addressed to the Circulation Dept. the UK’s worst civil engineering disasters in quarter of a Accounts Tel/Fax: century, and gave rise to a series of additional delays on Tel: +44 (0)20 7562 2432 other projects and astronomical fines. Fax: +44(0)20 7374 2701 Londoners living above the Crossrail routes will be relieved to know that Crossrail’s approach to risk marks CIR Magazine is published by: a sea change now taking place in the construction Perspective Publishing industry, and between now and 2018, when services 6th Floor, 3 London Wall Buildings are scheduled to commence on the central section, the London, EC2M 5PD UK project will be watched closely by all with an interest in Tel: +44 (0)20 7562 2400 risk management. Fax: +44(0)20 7374 2701 cirmagazine.com Deborah Ritchie Editor 05 Image by Crossrail Ltd Crossrail Image by cirmagazine.com october 2012 News & Analysis l Editorial l Features News & Analysis l Editorial l Features [ ] Analysis [ ] Taming the beast We look at the recommendations of A Commercial Approach to Managing Civil and National Security Risks, written by risk management and corporate governance practitioner Atula Abeysekera ince Nassim Nicholas Taleb published his now infamous (at least in our sector) Three lines of defence and scenario testing. Modelling techniques Sbook, The Black Swan, the concept This report proposes that the government adapts used by business, such as ‘value at risk’ and of the seemingly harmless having a harmful best practice used in multinational companies ‘GARCH with dynamic conditional correlation’ effect (the black swan) has now entered into where a sound risk framework should have could contribute to a better understanding of risk the common parlance of big business, with risk three lines of defence. From a UK government interactions quantitatively. In addition, a robust managers busily deploying strategies to better perspective, this would look like the following, stress-testing programme is needed to simulate predict and deal with their fall-out. says Abeysekera. “The first level of defence extreme events involving UK’s civil and national So as businesses (and especially financial is the government department where the risk security risks. institutions) begin to acknowledge the necessity originated and is responsible for managing The point of this exercise would be to design, of understanding black swan events and that risk. The second level of defence is the using simulated scenarios of events that could incorporating them (as best they can) into their Civil Contingencies and National Security significantly impact the country, effective business models, Abeysekera feels the UK Secretariat’s efforts on risk mitigation, which contingency plans to mitigate the effect of government has started to lag in its thinking would likely operate out of the Cabinet Office. these risks. Such a programme could help around black swan risks.