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Fly-tipping costing UK’s security industry “thousands of pounds” in clean-up and insurance claims

According to the British Security Industry Association (BSIA), the illegal dumping of waste by criminal gangs is costing the UK’s security industry thousands of pounds in clean-up costs and insurance claims.

The costs, which might be borne by the landlords of fly-tipping ‘hotspots’ if they’re not covered by insurance, can routinely reach hundreds of thousands of pounds. Indeed, claims have been known to regularly exceed this figure.

Companies who fail to adequately protect their assets, or have been victims of fly-tipping in the past, could find their insurance cost rising. Some of these costs are met by taxpayers. According to the Local Government Association, the cost to taxpayers of clearing up fly-tipping rose to £57 million in the past year. That’s up 13% on the previous 12 months.

Restrictions on the tipping of waste and the inevitable dumping to avoid paying for waste processing are key factors underpinning this unlawful behaviour. In recent times, a far larger and more costly crime is occurring on an almost daily basis. This involves the unlawful occupation of land followed by large-scale collection and disposal of waste. There have also been many cases of industrial units rented on short leases which have then been filled with illegal waste and left for the landlord to clear up.

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The recent surge in fly-tipping is put down to an influx of organised gangs offering cheap disposal services to businesses and then simply fly-tipping the waste to avoid the payment of landfill tax which is currently set at £88.95 per tonne*. More sophisticated fly-tippers have also been setting up dummy companies advertising cheap skip rentals. They take out short term leases on warehouses then fill them from floor to ceiling with waste before moving on ahead of the landlord realising that rent hasn’t been paid.

Focus on serious crime and terrorism

Tony Cockcroft, chair of the Security Guarding Section at the BSIA, said: “This activity is being conducted on an enormous scale and involves the tipping of hundreds of tonnes of waste. The waste is collected from building sites and garden and house clearances. It’s a criminal activity netting large amounts of money for those involved in the process.”

Cockroft continued: “In most cases of land tipping, the perpetrators are evicted from the site only to move on to another close by and repeat the same activity again and again. The police and other agencies seldom make arrests, prosecute individuals or confiscate vehicles largely due to their already overstretched resources having to be focused on serious crime and terrorist threats.”

Gideon Reichental, chair of the Vacant Property Protection Section at the BSIA, told Risk Xtra: “Fly-tipping isn’t just an unnecessarily expensive eyesore. It can also be dangerous. Tipped rubbish has been known to include specialist and clinical waste which may be hazardous. Mixed waste can spontaneously combust. This harms the environment through airborne pollution and contaminated fire-water run-off, which is why it has never been more important to tackle the problem head on.”

Reichental added: “The BSIA’s Vacant Property Protection Section has had a keen interest in this problem as it affects many of our clients in the public and private sectors on a day-to-day basis. They’re working closely with the Association’s lobbying team to see what additional Government support or legislation might be provided in order to help address this issue.”

Protecting large areas of land

Protecting large areas of land can prove difficult, but there are a number of fairly simple and inexpensive measures that should be considered as it’s far better, and ultimately cheaper, to deter a person from entering land rather than having to subsequently evict them and restore the site.

As a minimum, the BSIA recommends the installation of strong metal gates with toughened steel padlocks and anti-lift hinges. If the site is vacant, block all vulnerable access points with concrete barriers. Secure the perimeter with strong fencing, posts, earth mounds or trenches and frequently check the site and the perimeter.

The BSIA also advises landlords of industrial units to put in place robust procedures to identify if the persons looking to rent a property are fit and proper to do so.

It’s also worth contacting the police on 101 if there’s a suspicion that land is being illegally occupied, though police officers harbour only restricted powers to deal with people who breach civil law by trespassing. In certain circumstances, a direction to leave may be made and, in the event of non-compliance, arrests may follow.

However, the powers to remove trespassers are discretionary and will not be used by the police unless considered absolutely necessary. If trespassers don’t leave a site when requested to do so then landowners should go through the normal channels of civil recovery as quickly as possible to mitigate the potential damage and resulting costs.

*All figures quoted in this release have been provided by Dougie Barnett, head of mid-market and customer risk management at AXA Insurance

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“UK businesses could spend £1.2 million recovering from a cyber security breach” states new research from NTT Com Security

Most business decision-makers in the UK admit that their organisation will suffer from a cyber security breach at some point. They also anticipate that recovering from a data breach would cost upwards of £1.2 million on average for their organisation. That’s according to the Risk:Value report issued by information security and risk management company NTT Com Security, which surveyed business decision-makers in the UK as well as the US, Germany, France, Sweden, Norway and Switzerland.

While nearly half (48%) of UK business decision-makers say that information security is ‘vital’ to their organisation, and just half agree it’s ‘good practice’, a fifth admit that poor information security is the ‘single greatest risk’ to the business ahead of ‘decreasing profits’ (12%) and ‘competitors taking market share’ (11%) and on a par with ‘lack of employee skills’ (21%).

Well over half (57%) agree that their organisation will suffer a data breach at some point, while a third disagree. One-in-ten state that they simply don’t know if this will be the case.

Respondents estimate that a breach would cost them an average of £1.2 million, even before ‘hidden costs’ like reputational damage and brand erosion are taken into consideration. Again, on average it would take around two months to recover from a breach. Respondents to the comprehensive survey also anticipate a 13% drop in revenue, on average, following a breach episode.

Starting to hit home

The survey shows that recent high-profile data breaches are starting to hit home. A similar report published by NTT Com Security in 2014 revealed that 10% of an organisation’s IT budget was spent on information security compared to 11% this year. However, in the latest report, around a quarter (23%) of UK businesses reveal that more is spent on Human Resources than information security.

In terms of remediation costs following a security breach, nearly a fifth (18%) of a company’s costs would be spent on legal fees, 18% on fines or compliance costs, 17% on compensation to customers and 11% set aside for third party remediation resources. Other anticipated costs include PR and communications (14%) and compensation paid to both suppliers (12%) and employees (11%).

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According to the report, the majority of respondents in the UK admit they would suffer both externally and internally if data was stolen, including loss of customer confidence (66%) and damage to reputation (57%) as well as suffering direct financial loss (41%). Over a third of decision-makers (34%) expect to resign (or expect another senior colleague to do so) as a result of a breach.

Stuart Reed, senior director for global product marketing at NTT Com Security, commented: “Attitudes towards the real impact of security breaches have really started to shift. That’s no surprise given the year we have just had. We’ve seen several major brands reeling from the effects of serious data breaches, and struggling to manage the potential damage, not only to their customers’ data, but also to their own reputation. While the majority of people we spoke to expect to suffer a cyber security breach at some point, most fully expect to pay for it as well, whether that’s in terms of third party and other remediation costs, customer confidence, lost business or even, possibly, their jobs.”

Who’s responsibility is it anyway?

*41% of UK organisations have a disaster recovery plan in place, with 40% having a formal security policy in place. In both cases, almost half are in the process of implementing or designing one

*When it comes to responsibility for managing the company’s recovery plan, 15% say the CEO now has responsibility, although this still largely falls to the Chief Risk Officer (CRO), the Chief Information Officer (CIO) or the Chief Security Officer (CSO)

*While 77% agree it’s ‘vital’ their business is insured for security breaches, only 26% have dedicated cyber security insurance. However, 38% of those questioned are in the process of obtaining a policy

*One-in-five respondents in the UK say they don’t know if their organisation has any type of insurance in place to cover for the financial impact of data loss or an information security breach

“It’s encouraging to see that almost all UK businesses now have a disaster recovery and formal information security policy in place, or are at least planning to implement one soon,” added Reed.

“Clear, concise internal processes and policies for employees and contractors have so often been overlooked, and this is what can lead to complacency and poor security hygiene. When we talk to clients, we make it absolutely clear that educating staff about security should be a top priority, supported all the while by clear and simple procedures and backed up by a solid incident response plan.” 

*The Risk:Value Executive Summary report can be downloaded here

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Institute of Risk Management experts outline key risk areas for 2015

Political instability caused by low oil prices, increased shareholder activism and the business threat posed by a potential UK exit from the EU are among the chief concerns voiced by some of the UK’s leading risk experts for 2015.

As 2014 draws to a close, members of the Institute of Risk Management (IRM) were asked to identify key risk areas for 2015. A broad range of oil and gas, political, healthcare, regulatory and insurance risks were highlighted as potential flashpoints.

Oil and Gas

“The lower oil price will raise a number of risks, including political and social disruption in oil producing countries which, if not successfully managed, will impact on the world,” asserted Mark Boult, Fellow of the IRM and director at risk management consultancy DNV GL.

Boult continued: “Given the greater financial pressure we will see on the sector next year, stakeholders need to maintain their focus on the integrity of assets. Not doing so will deliver poorer reliability and increase the risks of a major accident. Industry and Governments should work together to proactively manage down the commercial pressures and risks facing the industry from the oil price drop.”

A catastrophic major accident and physical asset integrity will remain a major industry focus for next year. “Such events are always – and always need to be – at the front of our minds given the impact they have on people, the environment and the business of the industry as a whole,” explained Boult.

Commentators from the IRM have mapped out key potential risks for 2015

Commentators from the IRM have mapped out key potential risks for 2015

Politics

An uncertain political environment in the UK is highlighted as a key risk area for next year by IRM members. “We need to watch closely how the dialogue between the UK and EU develops,” said José Morago, IRM chairman and group risk director at Aviva. “The potential risk of a UK exit from the EU could bring about even bigger strategic, operational and legal risk challenges to many international companies than those raised by Scottish independence.”

Morago added: “Next year, we have the UK General Election and possible presidential elections in Europe. With continuing fiscal deficits, cost of living pressures, low investment returns and low public trust in financial institutions, there’s a real risk of further – and bolder – political announcements as parties compete for public approval.”

Mark Butterworth, member of the IRM and managing director at risk management consultancy Condie Risk, believes the unpredictability of next year’s UK General Election is unique in his adult memory. Butterworth argues that a vote to leave the EU could provide the Scottish National Party with a boost, “possibly leading to the start of the ‘second’ wave for independence.”

Alternatively, an indecisive result in a May election which fails to resolve ‘the European question’ could lead to “upheaval, forcing a second General Election in late 2015, with all the attendant uncertainty that entails.”

Healthcare

The total number of Ebola deaths is predicted to peak in 2015 according to Patrick Keady FIRM, risk leadership consultant with the NHS. “This will be achieved by continuing with current levels of awareness, actions and plans and by Governments avoiding ineffective knee-jerk reactions. Lessons will be learned from Sierra Leone’s handling of the crisis where 21% of people infected died compared to 60% in Guinea and 42% in Liberia.”

Further 2015 predictions by Keady are as follows:
• “It will be the year more people will say ‘No’ to so-called ‘healthy food’, leading to reduced demand for healthcare in the long term. People can consume up to seven times the World Health Organisation’s daily recommended amount of sugar when their diet is limited to foods such as low fat yoghurts, muesli bars and sports drinks. The debate about processed versus natural food will escalate with the launch of ‘That Sugar Film’ next year.”
• “Drugs and alcohol will both start to be seen as healthcare issues. With 9% of all emergency hospital care being for people with a drug or alcohol problem, 36% of these are from the most disadvantaged neighbourhoods. An increased focus on the health implications of drugs and alcohol will start to benefit the population and, in turn, reduce drug and alcohol-related crime statistics.”

Regulation

According to IRM commentators, new regulation is going to pose risks for companies and company directors in 2015.

Taken together, the 2014 UK Corporate Governance Code and Financial Reporting Council’s Guidance on Risk Management will significantly upgrade the weaponry of shareholder activism in 2015. “Greater corporate governance and risk management education at Board level – including Company Secretaries – will be needed to mitigate against the risk posed by the new regulatory environment,” stated Mark Butterworth.

The Financial Conduct Authority’s drive for greater competence and capability means that Boards of Directors must be far more proactive about ensuring their capabilities match their needs. José Morago commented: “Boards need to identify governance gaps and plug them fast, whether that’s through acquiring new skills, qualifications or experience. What’s expected from Boards is going to be raised quite fast next year.”

Insurance

Reduced profitability for the UK insurance sector is an identifiable risk for 2015 according to Enrico Bertagna, IRM affiliate and senior vice-president of business development at Allied World Europe Insurance.

“If there’s no material change in claims trends or major catastrophes,” outlined Bertagna, “we’re looking at ongoing downward pressure on premium rates, reducing underwriting profits in most classes of business.”

Bertagna also believes we’re likely to see a trend towards the localisation of risk in 2015. “We’ll see less premium flowing to London from emerging markets. That will lead to reduced premium to London market insurers on the one hand, while potentially exposing local market insurers to greater volatility on the other.”

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