From the monthly archives:

February 2010

The Fraud Triangle: Rationalization

by John February 25, 2010
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Criminologist Donald R. Cressey identified three traits that are commonly present when people perpetrate fraud. Cressey created an hypothesis known as the ‘fraud triangle.’ The three sides of the fraud triangle are:

Rationalization – Since the majority of individuals who commit serious occupation fraud are not career criminals, they feel a strong need [...]

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Why Do You Need a Forensic Accountant Hired Gun?

by Bob Trompeter February 23, 2010
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In the 1960 movie The Magnificent Seven, Steve McQueen and Yul Brynner were hired to protect a small Mexican town from outlaw Banditos.  The Mexican villagers realized they needed to fight fire with fire by employing their own hired guns.
When adjusting a business interruption loss the insurance company often hires an outside forensic accountant to [...]

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Buyer Beware: Why Your Forensic Accountant Needs the Right Creds

by John February 21, 2010

The forensic accountant is a strange animal. Did you know that there are no ‘official’ credentials required for an individual to claim he is an ‘expert’ in the field of preparing a business interruption insurance claim?  I have seen some experts with undergraduate degrees in accounting, economics, finance, engineering, computer science, mathematics, even philosophy.  I [...]

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Professional Services Firms Need the Right Extra Expense Coverage and a Rock Solid Business Continuity Plan

by John February 19, 2010

I am often asked to assist professional services firms, such as attorneys, accountants, engineers, and doctors, with estimating their business income values at risk.  My advice to professional services firms is often the same:  assume you will collect nothing for your lost business income.  I know that this advice sounds harsh and may seem shocking. [...]

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Schools: Beware the “Loss Of Market” Exclusion When Submitting a Business Interruption Insurance Claim

by John February 17, 2010

Following Hurricane Katrina, I was retained to help a private school quantify its business interruption loss.  I valued the business interruption loss related to the period of restoration as well as the extended period of indemnity.
The first hurdle was getting the adjuster to understand that a school doesn’t make widgets.  What I mean is that [...]

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Developers: The General Contractor Can Cost You Millions On A Construction Delay in Completion Insurance Claim

by John February 15, 2010

When you are the developer of a commercial property, a lot is riding on your general contractor, and never more so than when you must submit a construction delay in completion insurance claim.  The general contractor is the person in charge of building the project, making sure all of the subcontractors get paid, and keeping [...]

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Private Schools: Avoid This Potential Pitfall

by John February 13, 2010

When it comes to preparing a business interruption loss insurance claim, one industry that is very unique is private schools. Private schools have specific risk exposures that can quickly turn into a problem if the exposures are not addressed before a loss occurs. One such issue relates to tuition and the contract signed [...]

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How to Recap a Phone Conversation With Your Insurance Adjuster

by John February 10, 2010
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When dealing with an insurance company representative regarding a business interruption loss insurance claim, it is prudent to operate under the assumption that if it is not in writing, it never happened.  Verbal meetings to discuss a business income insurance claim can be very productive, whether they happen face-to-face or over the phone.
However, I always [...]

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What To Do When the Adjuster Blames the Economy for Your Business Interruption Loss

by John February 8, 2010

“Due to the economic crisis…”
This is the current preamble of choice for adjusters to inform a risk manager, corporate officer, or business owner that a business interruption loss will not be paid or will be extremely reduced.  Do I sound a little angry as you read this?  I’ll admit that this current approach by many [...]

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Tips for Assembling a Disaster Recovery Team

by John February 5, 2010

After a fire, flood, earthquake, or other major disaster, corporate officers, risk managers, and business owners are faced with making quick decisions related to disaster recovery. When the unthinkable happens, there are many different professionals or services that a business may need to hire quickly in order to minimize a business interruption.
I’ve worked with many [...]

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