Howard Karp, a chef at the Waldorf Astoria and instructor at the California Culinary Academy who cooked for four U.S. presidents, once told me the secret of cooking: "It's all in the technique. There are no shortcuts."

Exquisite food comes from a highly trained, coordinated and cohesive kitchen operation that involves culinary skills such as slicing, dicing, searing and sautéing. Chef Karp added: "One must also understand the chemistry of cooking."dwdwdw He explained that the order and manner in which all the ingredients are "introduced to one another" makes all the difference.

Watching him cook a five-course dinner for a small group of us was like watching an artist paint a masterpiece. I never followed a recipe card again.

In my world, risks are a common ingredient and need to be handled just as expertly as the fish, meat and other ingredients that Chef Karp works him magic on. The risks to business ventures include:

1. Damage to reputation/brand
2. Economic slowdown/slow recovery
3. Regulatory/legislative changes
4. Increasing competition
5. Failure to attract top talent
6. Failure to meet customer needs
7. Business interruption
8. Third-party liability
9. Cybercrime/viruses
10. Property damage

Some organizational risk management programs I've seen follow a recipe of sorts that seems to have been passed down from one risk manager to another -- but only good wines and spirits improve with age.

Clearly, the prevention of accidents (workforce, property, fleet, customer, etc.) establishes the basis for sustained profitability. So, boards demand that senior management have robust involvement in the organization's enterprise risk management (ERM) efforts. Risk management departments cannot operate outside the business flow and related decision-making processes. Management silos have no place here. Decisions about risk must be driven across all operational aspects of the organization in a consolidated, standardized fashion to build trust and meaningful partnerships with operations.

But the traditional corporate approach to reducing risks is one clever safety campaign after another. Risk management staff, especially those in workers' comp, obsess on frequency and severity -- cutting the number of claims and reducing reserves and settling claims. Risks are "managed" by things like: compliance enforcement; personal protective equipment (PPE); signs; and those safety contests. Risk management operations are often buried in finance, HR or legal departments.

But these loss controls, from my experience, are no match to the potential losses that may occur under a bureaucratic, disliked supervisor.

Senior management must raise its game and focus on the strategic components of risk, such as: alternative risk financing, market economics, reputational risks and human capital. In turn, management needs to know the true costs in each business unit. Relevant risk factors may be buried in a ream of statistics, but corporate executives need to know if their risk management program is making an impact. How is information collected, managed and disseminated? Are your analytics predictive?

After 38 years of directing risk management, I believe that organizations must embrace what some friends and colleagues are calling a culture of safety (COS). This is the pièce de résistance.

COS involves using embedded risk management teams in each business unit to send signals up and down the corporate ladder that loss control is much more than a motto or simple list of steps to take. COS requires developing loss-control programs that are a product of the DNA of a specific organization. COS builds strong, binding partnerships among business units that allow the development of a platform for data analytics, volatility analysis, forecasting and reporting that allow for continual improvement through ERM/Six Sigma. COS has demonstrated significant savings, in the tens of millions of dollars a year at a single company.

There are five essential stages to a viable culture of safety:

1. Awareness, repositioning of responsibility and analytics
2. Cultural sustainability through behavioral economics
3. Behavioral change through positive observations
4. Combined service, safety and engagement measures
5. Extended service, safety and engagement measures to the community

An organization should have a vision to assess knowledge, skills and abilities and work with HR to train employees to bring about new levels of expectations. Old safety methodologies focused on inspectors; audit and regulatory-based decisions; checklists and processes; task completions; and frequency-based decisions. COS, on the other hand, is behaviorally focused using coaches, trainers and outside consultants who partner with teams of employees who are already technically proficient and operational savvy. In addition, key performance indicators (KPIs) can help shape behaviors.

To deploy a viable COS, companies should consider using qualified outside experts as a diagnostic tool to identify and quantify risks using meaningful analytics. Companies need to know how they stack up against the competition. This type of analysis by reputable firms can provide practical insights for senior management and lead to the building blocks for a fine-tuned corporate risk strategy and an enhanced culture of safety.

One such consulting firm, Operant Solutions, inspired me to write this article with stories on risk management successes it presented at the RIMS Western Regional Conference in Lake Tahoe recently. (If you're interested in getting a copy of the presentation, you can contact Sue Antonoplos at 650-336-3144.)

I am inspired by the words of Julia Child: "Cooking well doesn't mean cooking fancy."

Overheard at "Insurance Disrupted 2015," held Nov. 18 and 19 in Palo Alto, CA, cosponsored by Silicon Valley Innovation Center and Insurance Thought Leadership:

From The Sun Also Rises, by Ernest Hemingway:

"How did you go bankrupt?"... 'Two ways. Gradually, then suddenly.'

Paul Carroll, CEO of ITL:

"Insurance has been in the 'gradually' phase of disruption; the 'suddenly' phase is here."

Tongue-in-cheek lines from others:

"The future always happens."

"Moving at the speed of insurance"

There were many loud-enough-to-be-heard, smart, rational and innovative voices calling for change to the historic model for insurance at last month's gathering of insurance disruptors in Palo Alto. Most encouraging is that these voices were coming from both traditional players and entrepreneurs behind an emerging insur-tech start-up sector.

Close to 200 of these folks (as well as several hundred more via live streaming) converged at an Elks Lodge of all places to share insights and ideas about how to create new business models, more compelling and engaging client experiences that meet overlooked marketplace needs, new products and new distribution methods. All are taking advantage of technological possibilities that may seem old-hat in other sectors, whose digital maturity is further along on the curve.

This post captures the main messages delivered by several dozen speakers and panelists during the event:

• Insurance businesses able to see themselves in the prevention business, not just in the protection business, will be the ones that thrive. The potential to shape strong, compelling offerings that help people anticipate and avoid risk has great, untapped commercial potential and holds the possibility of truly improving people's lives. But one of the biggest challenges for historically successful executive teams is being able to reframe a company's purpose away from its past greatness toward a different future. So many businesses end up dead or among the walking dead because they are unable to leave behind an outmoded definition of how they created value vs. what it now takes to succeed. Technology is just the enabler -- success is about mindset, vision, leadership and conviction.

• Value beyond the product sales transaction will create massive opportunity for those able to act upon the possibilities. Many examples exist of companies in other sectors (and are beginning to emerge within insurance) that add value before and after the transaction. Think of any brand you love because of the experience leading up to and following the actual purchase event. These same opportunities exist in the insurance sector. As one of my favorite, preeminent global innovators likes to say, "There's gold in them there hills."

• Does anyone really want to buy insurance? No. People buy insurance to solve an "end-game" problem. We are entering the era where winners will be those who show they understand this. It's about clients, not products. Client-centricity is too often a fashionable mantra, but in reality is relegated to lip service. Insurance grew up as a sector engineered to push product through a distribution system where the incentives were to push more product. The connection between client-focus and both a healthy P&L and balance sheet is well-established in other sectors, and is no less true here. Incumbents face cultural, infrastructure, regulatory, metrics and talent challenges to execute this shift. In contrast, start-ups unencumbered by legacy issues are hard at work pursuing client-focused business models with such intensity that there will be breakthroughs at scale. It's only a matter of how soon. The winners will combine digital technologies and advanced analytics and insight to define their future and not be tied to a rear-view mirror perspective.

• Think emergent knowledge, not big data. Does anyone really think they need more, bigger data? Frankly, as I meet with executives and discuss the challenges of competing in our world, no one complains about lack of data. A mentor taught me years ago that it's most important to know what questions to ask. In the big data era, too many people are going backward from the data, setting themselves up to amass as much as they can and then trying to figure out what to do with all of it. Meanwhile, they've increased their costs and security risks, and bogged down always-scarce analytics and IT talent in misguided exercises. Insurers possess via their actuarial capabilities some of the most analytically intense talent anywhere. Is it possible to redirect some of this incredible capability and use it to ask the right questions? Don't worry about obtaining more data. Assume any data you want will be available at some point. These sorts of mindset shifts will set insurance sector participants on the path to accelerating knowledge that will lead to new opportunities.

• The cloud is not about automation, The cloud is about the incredible possibilities enabled by data transparency and availability, and by the synthesis of formerly unimaginable kinds of disparate data accessible through increasingly improving user-interface layers powered by smart algorithms and machine learning. Insurers that approach the cloud as mere automation driving cost savings will be left behind, not only by competition but by clients who are becoming empowered by their own ability to get their hands on their data, and as a result gain more understanding and control over what their insurance needs really are, and how best to meet them.

• Data synchronicity can be an opportunity or a threat. Insurers have earned their keep by taking advantage of the fact that they had intelligence and insights that clients and distributors could never access. Think about it: The pooling of risk is built upon carrier ability to bring together disparate data about scale populations to foresee risks and price against the odds of them occurring. That advantage is eroding as data become more widely distributed and accessible. The habit of looking back at a decade's worth of data to assess risk and create actuarial tables will be replaced by constant testing in small chunks that drives continuous learning. Behavioral modeling will become real time, and acting with speed to execute on constant new knowledge will be the basis for competitive advantage.

• Usage-based insurance - UBI - is driving toward hyper-specialization and personalization in underwriting, sales and service. The industry will move away from the whole notion of insuring a pool, toward being able to price an individual based on her driving, health, property care and behavioral record, and insure her neighbor entirely differently. If the notion of pooling of risk goes away, the entire structure of the industry will evolve to something new. Don't just stay tuned. Tune in.

• The smart home, smart car, smart-everything-in my-life is creating data sources contributing to UBI capabilities, giving insurers the ability to help me anticipate and even prevent risk. The insurance sector in total probably knows more than just about anyone else about so many aspects of your life -- this is the sector's opportunity to realize or squander. The sensors becoming embedded in every aspect of our lives will have profound implications for every aspect of the insurance sector, many of which are not identified, yet alone understood. See first point above; insurers must shift to being in the prevention business, not just the protection business.

• Compared with Congress, whose overall approval rating is at about 14%, the industry's average Net Promoter Score of 46% may not look that bad. But it's a sorry state of affairs. One major carrier has an NPS that is actually negative, and others are in competition with the government for setting a low bar. One can only imagine the upside from raising the propensity to be recommended to others by current clients. Acting upon the points already shared above will directly contribute to achieving acceptable satisfaction levels. Action to create true multi-channel sales, service and claims experience aligned with how clients really behave will take focused work and investment. And time. It's time to start, now.

• In the U.S., a full 87% of people under 35 have no contents insurance. What is the societal risk of leaving a generation unprotected from the risks that invariably befall some among us? Insurance ownership has traditionally been part of the bedrock of an economically healthy society. If the under-35 crowd is not connecting with the traditional offerings of the industry, given the consequences, how will the industry step up and move to a position of relevance motivating enough for this important demographic to see it as worthy of a piece of their wallet?

• Will you be an insurer that leverages marketing and technology, or reframe your self-image to that of a technology and marketing company that happens to sell insurance? One of the greatest inhibitors of transformation is the inability to reshape your business model and all of its many elements to align with where the world is going, not to where the world has been. As yet another mentor taught me early in my career, "You are who you say you are." Who are you?

The future always happens. What I overheard in Silicon Valley suggests that for some it will happen to be an exciting time of growth and renewal. Others continue to scratch their heads. Many (understandably) feel a bit bewildered. The good news about being late to the game vs. peers in industries in the throes of disruption -- think media, music, retail and the insurers'dw cousins in banking -- is that there are meaningful models, execution paths and stories of success and failure that can enable leapfrogging in a position of leadership and strength toward what this sector will become.

Today, my (snail) mailbox contained a postcard from Verizon offering to turn my car into a connected car. To be more precise, the offer was to my 22-year-old daughter -- neither my wife nor I got the same offer. In essence, Verizon provides a device that plugs into the OBD port, a second device that clips on the visor and a smartphone app to control the service. This is an excellent example of other industries seizing on opportunities that should be prime territory for insurers.

Verizon's hum service (www.hum.com) includes capabilities in six areas: roadside assistance, diagnostic alerts, a vehicle locator, a certified mechanics hotline, maintenance reminders and hotel/car rental discounts. It's being pitched as a great holiday gift -- just plug it in, and you are ready to go!

This is by no means the only offer of this type. Other companies such as Automatic Labs (www.automatic.com) sell OBD devices that provide a variety of services. Automatic has a "Do not disturb" app (Androids only) that keeps the phone quiet while someone is driving, to minimize distractions and reduce the urge to text. The Automatic device/apps will also alert the driver when she is exceeding the speed limit, track when the ignition is on/off, send help if you crash and trigger actions like closing the garage door when you leave the house.

At SMA, we've been advocating more varied value propositions for telematics for some time. Some insurers outside the U.S. have ventured into value propositions that have included vehicle location, vehicle performance and some of the other services offered by Verizon. But, in the U.S. today, the primary value proposition for personal auto is the potential to reduce premiums; a few companies are providing other services, such as encouraging safe driving.

What is frustrating is that the insurance industry was the pioneer in telematics and experimenting with the use of OBD devices, car navigation systems and mobile apps based on real-time vehicle data. These efforts stretch back to the late 1990s, with pilots by UK-based Norwich Union, then Progressive and others. Unfortunately, most insurers have been thinking about the potential in the context of current insurance products -- a coverage-based view.

The connected world is emerging rapidly, presenting many opportunities to provide services to homeowners, businesses, vehicle owners and other segments. Many of these services are aimed at improving safety and providing peace of mind to individuals and businesses.

Hmmm... sounds curiously like the core mission of the insurance industry.

Republicans stated goal is to "repeal and replace" the Patient Protection and Affordable Care Act. That hasn't happened and won't at least through the remainder of President Barack Obama's term. So a secondary line of attack is to undermine the ACA. And Sen. Marco Rubio has had success in that regard.

As reported by The Hill, Sen. Rubio accomplished this feat by weakening the ACA's risk corridors program. Whether this is a long- or short-term victory is being determined in Washington now. We'll know the answer by Dec. 11.

President Obama and Congress recognized that, given the massive changes to the market imposed by the ACA, health plans would have difficulty accurately setting premiums. Without some protection against under-pricing risk, carriers' inclinations would be to price conservatively. The result would be higher than necessary premiums.

To ease the transition to the new world of healthcare reform, the ACA included three major market stabilization programs. One of them, the risk corridors program, as described by the Kaiser Family Foundation, "limits losses and gains beyond an allowable range." Carriers experiencing claims less than 97% of a targeted amount pay into a fund; health plans with claims greater than 103% of that target receive funds.

The risk corridor began in 2014 and expires in 2016. As drafted, if payments into the fund by profitable insurers were insufficient to cover what was owed unprofitable carriers the Department of Health and Human Services could draw from other accounts to make up the difference.

Sen. Rubio doesn't like risk corridors. He considers them "taxpayer-funded bailouts of insurance companies at the Obama administration's sole discretion." In 2014, he managed to insert a policy rider into a critical budget bill preventing HHS from transferring money from other accounts into the risk corridors program.

The impact of this rider has been profound.

In October, HHS announced a major problem with the risk corridors program: Insurers had submitted $2.87 billion in risk corridor claims for 2014, but the fund had taken in only $362 million. As a result, payments for 2014 losses would amount to just 12.6 cents on the dollar.

This risk corridor shortage is a major reason so many of the health co-ops established under the ACA have failed and may be a factor in United Health Group's decision to consider withdrawing from the law's health insurance exchanges. (United Health was not owed any reimbursement from the fund but likely would feel more confident if the subsidies were available).

The Obama administration certainly sees this situation as undermining the Affordable Care Act. In announcing the shortage, HHS promised to make carriers whole by, if possible, paying 2014 subsidies out of payments received in 2015 and 2016. However, the ability to do so is "subject to the availability of appropriations." Which means Congress must cooperate.

That brings us back to Sen. Rubio's policy rider. It needs to be part of the budget measure Congress must pass by Dec. 11 to avoid a government shutdown. If the policy rider is not included in that legislation, HHS is free to transfer money into the risk corridor program fund from other sources.

Sen. Rubio and other Republicans are pushing hard to ensure HHS can't rescue the risk corridors program, claiming to have already saved the public $2.5 billion from a "crony capitalist bailout program." Democrats and some insurers, seeing what's occurred as promises broken, are working just as hard to have the rider removed.

By Dec. 11, we'll know whether the ACA is further undermined or bolstered.

Sleep deprivation is an issue that is often overlooked, yet frequently the cause of decreased productivity, accidents, incidents and mistakes that cost companies billions of dollars each year, reports Circadian, a global leader in providing 24/7 workforce performance and safety solutions for businesses that operate around the clock.

Often, the experts at Circadian say, employers are unaware of the impact fatigue or sleep deprivation is having on their operation until a tragic accident occurs. Only then do managers ask the question: "What happened?"

Sleep deprivation is much more dangerous than you might realize. It's not just annoying, like when an employee snoozes in a meeting or yawns during a conversation. Here are 10 real dangers associated with the overlooked problems in a sleep-deprived workforce:

1. Decreased communication: When workers are tired, they become poor communicators. In one study, researchers noted that sleep-deprived individuals drop the intensity of their voices; pause for long intervals without apparent reason; enunciate very poorly or mumble instructions inaudibly; mispronounce, slur or run words together; and repeat themselves or lose their place in a sentence sequence.
2. Performance deteriorates: Performance declines frequently include increased compensatory efforts on activities, decreased vigilance and slower response time. The average functional level of any sleep-deprived individual is comparable to the 9^th percentile of non-sleep-deprived individuals. Workers must notice these performance declines, right? Not quite. In fact, sleep-deprived individuals have poor insight into their performance deficits. Also, the performance deficits worsen as time on task increases.
3. Increased risk of becoming distracted: Sleep-deprived individuals have been shown to have trouble with maintaining focus on relevant cues, developing and updating strategies, keeping track of events and maintaining interest in outcomes and, instead, attend to activities judged to be non-essential. In fact, research suggests that there is a symbiotic relationship between sleep deprivation and attention-deficit hyperactivity disorder (ADHD) because of the overlap in symptoms.
4. Driving impairments: Because of federal regulations, the trucking industry is well aware of the driving impairments associated with sleep deprivation. However, plant managers are unaware of the ways in which sleep-deprived workers may be dangerously operating machinery (e.g. forklifts or dump trucks). In fact, 22 hours of sleep deprivation results in neurobehavioral performance impairments that are comparable to a 0.08% blood alcohol level (legally drunk in the U.S.).
5. Increased number of errors: The cognitive detriments of sleep deprivation increase concurrently with a worker’s time on a given task, resulting in an increased number of errors. These errors include mistakes of both commission (i.e., performing an act that leads to harm) and omission (i.e., not performing an expected task), which can wreak havoc at any work facility. Errors especially are likely in subject-paced tasks in which cognitive slowing occurs and with tasks that are time-sensitive, which cause increases in cognitive errors.
6. Poor cognitive assimilation and memory: Short-term and working memory declines are associated with sleep deprivation and result in a decreased ability to develop and update strategies based on new information, along with the ability to remember the temporal sequence of events.
7. Inappropriate moodines: Inappropriate, mood-related behavior often occurs in outbursts, as most sleep-deprived individuals are often quiet and socially withdrawn. However, a single one of these outbursts can be enough to destroy the positive culture of a work environment and cause an HR nightmare. These behavioral outbursts can include irritability, impatience, childish humor, lack of regard for normal social conventions, inappropriate interpersonal behaviors and unwillingness to engage in forward planning.
8. Greater risk-taking behavior: Brain imaging studies have shown that sleep deprivation was associated with increased activation of brain regions related to risky decision making, while areas that control rationale and logical thinking show lower levels of activation. In fact, sleep deprivation increases one's expectation of gains while diminishing the implications of losses. What does this mean for your workers? Sleep-deprived workers may be making riskier decisions, ignoring the potential negative implications and taking gambles in scenarios in which the losses outweigh the benefits.
9. Inability to make necessary adjustments: Flexible thinking, preservation on thoughts and actions, updating strategies based on new information, ability to think divergently and innovation are all hurt by sleep deprivation. A worker may be unable to fill a leadership role on request when sleep-deprived, resulting in a frustrated management team.
10. Effects of sleep deprivation compound across nights: Four or more nights of partial sleep deprivation containing less than seven hours of sleep per night can be equivalent to a total night of sleep deprivation. A single night of total sleep deprivation can affect your functioning for as long as two weeks. To your brain, sleep is money, and the brain is the best accountant.

According to Circadian, when you have sleep-deprived or fatigued workers, productivity levels and quality of work will be compromised. Furthermore, you create an environment where it becomes not a matter of if your workplace will have an accident or incident but a matter of when, and to what magnitude.

Sleep deprivation is no laughing matter, no matter how frequently our society treats the issue light-heartedly. Eventually, our biological drive to compensate for sleep deprivation wins, and the loser might be your workers, your employer or even you.

The expectation is that employees return to work in January feeling recharged and ready to perform their best. In reality, one in every five workers is sleep-deprived, and those who sleep poorly are 54% more likely to experience stress in their job, according to a new study from international employee health and performance organization Global Corporate Challenge (GCC).

The report, "Waking Up To the Sleep Problem Every Employer Is Facing," also found that 93% of poor sleepers were more likely to display workplace fatigue, a common symptom of excessive daytime sleepiness (EDS) - the condition proven to increase risks of absenteeism, accidents and injury in the workplace.

"Independent research undertaken on GCC participants in the 2014 challenge demonstrates that sleep improves with increased step count in a linear fashion," said Dr. David Batman, director of research, FCDP. "There are significant increases in productivity and reduction in fatigue and stress levels at work and home. Extrapolation of these results leads to an obvious conclusion that simple exercise improves sleep, and the combined result will be an increase in personal and business performance."

The results come from the health and performance leaders' first series of GCC Insights papers, based on aggregate data drawn from employees in 185 countries. With more than 1.5 million people having now been through the program, the data sample is one of the largest, most diverse of its kind.

This GCC Insights paper also provides practical recommendations for employers who recognize that their workers' mental and physical health inextricably is linked to business success - a realization that, for many, signals a need to rethink outdated well-being strategies in exchange for a longer-term commitment to employee health.

"The cost of poor sleep habits among employee populations has been grossly underestimated; it is having profound consequences for productivity and health," said Glenn Riseley, founder and president at the GCC. "Luckily, enlightened employers are now changing their cultures so that sleep is no longer seen as a luxury but as a priority."

I recently attended an outstanding industry conference. It really was one of the best-produced conferences I have attended since I started presenting at conferences (too) many years ago. The keynote speakers were all insightful celebrities, and the swag was better than what Santa has delivered to my house for the past two Christmases. Oh, yeah, and the presentations weren't bad, either.

During some of the breakout sessions, I overheard some conference attendees discussing their overarching strategy for usage-based insurance (UBI). I heard a couple of the usual comments, "We're waiting for all cars to have embedded connected car technology," and "We're looking for a smartphone solution."

However, I did hear a new comment that a couple of attendees admitted their companies have employed: the "me, too" strategy. I was a little caught off guard when I heard it. It is not an ideal strategy for deploying a UBI program. But it is plausible that those trying to minimize policyholder attrition would make the attempt.

In a "me, too" strategy, company X creates its own version of a product that already exists in the market, so that, when it is mentioned that competitor Y has this product, company X can say, "Me, too!"

This strategy might be more effective when selling hammers. Obviously, UBI is much more dynamic and should be part of a much larger strategy of improving risk management, pricing accuracy and policyholder intelligence. The data and analytics created from gathering valuable driving data have a wealth of utility.

Forgive me, I got lost in my own UBI infomercial...

Let's get back to the harmful impact of the "me, too" strategy on UBI. Typically, products launched under this strategy are not properly funded beyond product launch, as the program goal and the launching of the product are one and the same. Any long-term goals do not include improvements to the product, and any real value of the product is rarely realized.

The immediate negative impact of employing a "me, too" strategy is seen in the lack of resources to properly distribute, manage and improve the product. The approach also relieves anyone of responsibility for the product (or program), thus no one is required to show results or improvement.

In the long term, policyholders must endure the brunt of the "me, too" strategy. Their experience with an insufficient UBI product is poor, at best. Participation in the program steadily decreases, or stagnates. Either way, participant numbers never come close to those listed in the business case. Moreover, the product and program are disparaged in the market, and the company and ecosystem all receive negative marks from policyholders.

There are certainly better strategies that offer greater returns in the short and long term. I encourage those considering a UBI program to take a long-term approach. Gather information from multiple sources and pay just as much attention to the back-end management system for the overall program as you do the bells and whistles. It is the back-end management that will ultimately deliver a best-in-class UBI product as well as the data analytics, and more of the true program value.

Here is a bit of information that will be helpful when comparing back-end management systems. Look for the following:

1. Responsive dashboards that provide visibility into key performance metrics so you can make informed decisions about your program.
2. Data visualizations and program analytics embedded within the product to help you understand month-over-month program growth and analyze impacts of marketing campaigns, seasonal effects and geographical adoption.
3. Program diagnostics that provide you with detailed business intelligence to manage program health and identify areas for follow-up, such as potentially fraudulent behaviors.
4. Flexible reports that support online viewing, scheduling and exporting to fit within your best practices and business needs.
5. Flexible enrollment capabilities that support all stages of program growth with enrollment interfaces that support single to bulk enrollments, all backed by fully automated enrollment integration.
6. Integrated device tracking tools that provide full insights into shipping and the cadence of devices reaching your customers.
7. Comprehensive logistics tracking that is available throughout the account lifecycle -- from enrollment, shipping, delivery, installation and continuing data reporting for each user.

I hope this is helpful information. If you have attended any high quality connected car or UBI conferences, please drop me a note, as I am doing my own planning for 2016.

The number of brokers considering a human resources insurance system (HRIS) to handle compliance with the Affordable Care Act is staggering. It's the No. 1 topic of conversation at every industry function I attend. I just left a top producer event for a carrier, and when I shared with a group of attendees that we we not only have fully embraced a tool for this, but make it mandatory for doing business with us, some jaws dropped.

Certainly, the number of options have proliferated as of the last couple of years. But let me say, and please excuse me for being blunt, if you are considering an HRIS now, you are way too late! If you don't already have a single system you work with AND the people in-house to manage and build that system, you are way behind.

Many brokers I talk to think that picking and paying for a system is a big decision and a big investment...well, in my experience, that's the easy and far less expensive part. By far the bigger piece is having the in-house experts needed to build the tools for each client, educate each client and get the employers and employees dependent on it for their day-to-day concerns related to benefits (and those little things called IRS codes 6055 and 6056). In my agency, our in-house lead, Joan, can get me from employer decisions to open enrollment-ready in less than four hours!

In my humble opinion, this tool is not something you use for your biggest and best clients. After all, there is a huge learning curve for most of us on this technology, and that curve is only elongated if you use the system sparingly. Instead, if you embrace it fully, wrap your arms around it and give it a big hug, it becomes more valuable to you and your clients in a far quicker fashion.

If you are already an expert in a particular system and have in-house resources to build it and use it, you are light years ahead of your competition. And if you do this, doesn't this put you on par with Silicon Valley start-ups the technology front while blowing them away on the solutions side? Some industry gossip puts start-ups' retention around 60%!

A little advice, if I may, on which system to go with:

1) Make sure there is no per-user, per-month (PEPM) charge.

2) Make sure the system is not tied to a particular carrier.

3) Make sure the employee interface is beautiful.

4) Make sure it can handle all clients, large and small.

5) Make sure it has very terrific ACA capabilities -- which should be obvious.

6) Most importantly, make sure you get behind a system that you have 100% confidence will stay ahead of the rapid changes, and will always be dedicated to brokers.

Cyber attacks are escalating in their frequency and intensity and pose a growing threat to the business community as well as the national security of countries. High-profile cyber incidents in 2014 reflected the expanding spectrum of cyber threats, from point-of-sale (POS) breaches against customer accounts to targeted denial-of-service (DoS) attacks meant to disable a company's network. Businesses in ever-greater numbers sought financial protection through insurance, buying coverage for losses from data breaches and business outages.

Boost in Cyber Insurance Demand Drives Insurers' Response

Healthcare facilities, universities and schools continue to be on cybercriminals' radar, but attacks in the hospitality and gaming, power and utilities and other sectors reveal that no organization is immune to a cyber attack or failure of technology.

Healthcare and education clients had the highest cyber insurance take-up rates in 2014, followed by hospitality and gaming and services. Universities and schools present attractive targets because they house a vast array of personal information of students, parents, employees, alumni and others: Social Security numbers, healthcare information, financial data and research papers can all be compromised.

The broader scope of hacktivists contributed to the increase in cyber insurance purchases in 2014. Sectors that again showed notable year-over-year increases in the number of clients purchasing cyber coverage included hospitality and gaming and education. Other areas that stood out in 2014 included the power and utilities sector, with more clients buying standalone cyber coverage. Power and utilities companies frequently cite the risks and vulnerabilities associated with the use of supervisory control and data acquisition networks -- which control remote equipment -- and the cost of regulatory investigations as driving factors behind their cyber coverage purchases.

The reasons for purchasing cyber coverage vary from board mandates seeking to protect corporate reputations to companies looking to mitigate potential revenue loss from cyber-induced interruptions of operations. Insurers responded to this demand by offering broader cyber insurance coverage in 2014, including coverage for contingent business interruption and cyber-induced bodily injury and property damages. They also expanded availability of loss-control services, including risk-assessment tools, breach counseling and event response assistance.

Cyber Limits Rise

Companies with revenues of more than $1 billion have increased their cyber insurance limits worldwide by 42% on average since 2012, according to Marsh Global Analytics estimates. Over the same time period, healthcare companies have bought 178% more cyber insurance, and power and utilities firms have expanded their coverage by 98%.

Rising spending on cyber insurance

Cyber Rates and Coverage

Increases in the frequency and severity of losses and near-constant headlines about attacks and outages kept cyber insurance premiums generally volatile in 2014. Average rate increases at renewal for both primary layers and total programs were lower in the fourth quarter than in the first. The increased loss activity prompted pricing challenges for some insureds, particularly retailers, where renewal rates rose 5% on average and as much as 10% for some clients.

Market capacity also varied according to industry. Most industries were able to secure cyber coverage with aggregate limits in excess of $200 million, while the most targeted industries, like retailers and financial institutions, faced a challenging market.

Insureds also face heightened due diligence from underwriters seeking to drill down beyond simple reviews of the company's general information security policies. For example, insureds in the retail sector are being asked about their deployment of encryption and EMV (credit card) technology. And all insureds are now routinely asked whether they have formal incident response plans in place that outline procedures for protecting data and vendor networks and, more importantly, if such plans have been tested.

A Growing Concern

In 2015, managing cyber risk is clearly a top priority for organizations. For example, business interruption (BI) drew a lot of attention in 2014, a trend likely to continue throughout 2015. While BI has historically been thought of as the effect of a critical system going down for an extended period, technology failures and cyber attacks can create far-reaching outages affecting secondary systems, clients and even vendors. Such events can also lead to higher recovery costs, which are becoming a concern for boards of directors and senior management.

There is also concern stemming from the expansion of regulation and litigation. Regulators were active in policing cyber risks in 2014, and oversight is likely to expand significantly in coming years. With cyber risk seen as a critical issue on both sides of the aisle in Washington, D.C., companies will face regulatory challenges in 2015 and beyond.

Sectors that have already seen significant regulatory activity -- for example, healthcare, financial services and education -- will likely face more stringent regulations and larger fines. All industries should pay attention to existing and impending regulations, tighten controls and prepare to present and defend their compliance regime. Civil litigation in the wake of a breach or disclosure of a cyber event also escalated in 2014, with class actions at times following the disclosure of a breach by mere hours.

As demand for cyber insurance grows, remember that risk transfer is only part of the solution. Enhanced information sharing between industry and government is another step toward having a comprehensive risk-mitigation strategy. Insurers and brokers are expanding the availability of loss-prevention and risk-mitigation services such as risk-assessment tools, breach preparation counseling and breach response assistance. The expanded roster of services and enhanced coverage can provide additional value from policies, usually without a specific added premium.

Zenefits has hit a rough patch. Given the insults the company's CEO, Parker Conrad, has heaped on brokers, the schadenfreude percolating through the broker community is understandable. Yet declarations of Zenefits' demise are premature.

Zenefits raised $500 million in May at a valuation of $4.5 billion. At the time, Conrad claimed the company was "on track to hit annual recurring revenue of $100 million by January 2016." That was then.

Now, the Wall Street Journal is reporting that Zenefits is falling short of its earlier revenue projection. According to the Journal and Business Insider, through August Zenefits' revenue came in closer to $45 million, and the $100 million annual revenue figure is likely out of reach. In response, Zenefits is reportedly instituting a hiring freeze and imposing pay cuts. The latter step is cited as a reason at least eight executives left Zenefits.

In light of the news, in August or September Fidelity Investments reduced the value of its Zenefits investment by 48%, estimating the company was now worth about $2.34 billion. That's a seismic event: In May, Fidelity thought Zenefits was worth $4.5 billion. Just five months, later Fidelity thinks this was being a tad optimistic... if by "a tad" we mean "$2.16 billion."

In an interview with Business Insider, Conrad admits Zenefits is unlikely to keep his promise of $100 million of recurring revenue this year. However, he claims Zenefits continues to hire (although not as fast as in the past) and is happy with its revenue growth -- "more than $80 million of revenue under contract" (which, it should be noted, is not the same as saying "we've taken in $80 million so far this year," but maybe that's what he meant). Conrad also asserts that Zenefits is getting "closer and closer" to being cash flow-positive, although he doesn't expect it to get there until 2017 at the earliest.

Missing his $100 million commitment and having to address the subsequent fallout is no doubt adding to Conrad's stress levels. Because Conrad went out of his way to insult community-based benefit brokers on Zenefits' way up, the joy that brokers are taking in his discomfort now is to be expected -- and is arguably earned.

Should brokers assume Zenefits is no longer a threat, however? No. It is still bringing in tens of millions of dollars in revenue. According to what I've heard, only about 60% of this revenue comes from commissions. An ever-increasing portion of Zenefits' revenue flows from fees earned by selling third-party services or its own non-commission services. Zenefits launched its own payroll service, so its non-commission revenue will continue to climb. Zenefits may not be valued at $4.5 billion any more, but it is still valued at more than $2 billion. And while no CEO is happy when a serious investor marks down his company by nearly 50%, Conrad says Zenefits won't be out raising money anytime soon. As a practical matter, the impact of the devaluation on Zenefits is minimal.

In short, Zenefits is sticking around.

But I predict Zenefits is in for a rough time. Direct competitors like Namely and Gusto are raising money and stepping up. Community-based brokers are increasingly leveraging technology. (Full disclosure: Im co-founder of the company launching NextAgency, software that will help brokers level the playing field against Zenefits, so I'm delighted to point out this trend.)

While new initiatives like the payroll offering will create revenue streams for Zenefits, they also carry significant risk. Current partners will view Zenefits as a potential competitor. Management will be distracted from the company's core business. New skills and expertise need to be acquired. There's something to be said for focus, and Zenefits may be losing its.

Schadenfreude is German for deriving pleasure from the misfortunes of others. That Zenefits' current problems generate this impulse in the brokers they've insulted should surprise no one. That Zenefits will face challenges, problems and setbacks moving forward is inevitable. That community-based brokers should continue to take the threat Zenefits represents seriously is wise.

Judging by the reported 11,000 attendees at the Smart City Expo World Congress in Barcelona, representing companies and cities from around the world, there is great interest in governance, mobility, society, sustainability and technology. The trade show was very crowded even with sunny Barcelona beckoning with a perfect 71 degress Fahrenheit. The event gave me the opportunity to see many interesting technologies.

Many innovations focused on smart traffic routing and parking supported by sensors. Solutions in this category address the need to decrease traffic congestion or enable drivers to find available parking spots - problems afflicting many cities. Car-sharing initiatives by city communities were shown and explained. Autonomous vehicles were on display and got a lot of attention while raising questions about financing and insuring some of these new developments.

With the tragic events in Paris fresh in people's minds, city officials were very interested in any offerings dealing with crisis or incident management. One example was IOmniscient's 3D high-accuracy cameras that count people present in a specific location in real-time (very handy for crowd management). Other solutions include facial recognition capabilities to locate lost children or people of interest to law enforcement. These, and other applications, can assist local governments and citizens in preventing, managing and mitigating incidents.

"Gamification" got significant interest. Virtual reality environments supporting driving education or enabling urban planning were in high demand. There were also long lines for learning how to drive a real tram in a virtual city (not as easy as it looks). And Microsoft partner Geodan NEXT demonstrated how children were educated in smart-city development and how kids assisted in real-life design of schools and playgrounds by use of a Minecraft-based solution. In a more adult world, this same tool is being used for collaboration between professionals and citizens working together around a big touch table to address urban planning issues.

It is not often that I get to attend conferences outside of the insurance or technology space. It was refreshing to see the enthusiasm of professionals for innovation in a different industry. And many of the technologies that we frequently discuss, such as driverless cars, resource sharing, gamification, drones or Internet of Things, are equally relevant for smart cities.

I was also pleased with the balanced approach the people I spoke with took regarding opportunities for innovation and risk mitigation. Assisted by big data and technical developments, historically more disconnected industries such as technology, insurance, government, health or energy will quickly become more connected to each other, and the people of the world will collaborate in smart communities to capitalize on innovations.

The show in Barcelona was an uplifting experience, even with the sun beckoning.