| ISSUE # 21 | MARCH 1 9 9 8 |
Insurance & Risk Management Ideas Made Simple in Two Minutes |
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THE YEAR 2000 ISSUE (OR "Y2K") Before you read this - remember, it's only one page. It's the tip of the iceberg. Start reading all you can find on this topic. Y2K INSURANCE IMPLICATIONS It's simply too expensive and affects too many folks to be an insurable peril. To qualify for insurance, a peril must be quantifiable monetarily, be an accident, and not be catastrophic to the insurance industry. Man, women and child, the Y2K results may be way more than catastrophic!!! Conservative estimates project a total cost of $600 Billion - with a capital B. That's more than the pollution, the tobacco and the asbestos problems combined. The insurance industry doesn't feel the existing policies cover the Y2K issue as written but just to be sure, all insurers are printing specific additional exclusions letting you know it's not covered. If you have lots of money, there are a few hybrid Y2K policies available with a minimum premium starting at $25,000. BASIC ASSUMPTIONS The problematic silicon chip is truly a commodity. It is mass produced, it's cheap, it's not serialized, and once installed, most can't be tested. These cool little wafers impact our lives virtually ever moment. My 3 year old Grandson must have 75 Fisher Price toys with chips in them. Use your imagination and you will quickly find most everything in which you come in daily contact has some sort of chip in it to function. Technology makes our lives easier, quicker, simpler without a lot of added cost. The problem now becomes insidious. The chip may or may not misfire at 12:01AM 2000. It doesn't matter if the chip is running a clock or a machine. On the stroke of midnight, Technicians aren't real sure if the windshield wipers on your car will quit or become erratic. Tell Grandma not to bake any cookies at midnight, 12/31/99. HERE’S AN EXAMPLE: You enter a building with 6 elevators, all by the same manufacturer, all installed in 1977. Each elevator contains a few computer chips. All work perfectly and have been serviced properly. The elevator company orders zillions of identical chips each year which are tossed in the chips barrel for use during the assembly process. By now you have figured it out: We don't know which elevator has which chips supplied by which supplier. Will all elevators fail, or only one, or only a portion of one? |
THE "IMBEDDED CHIP" PROBLEM That's pretty much what the elevator example is all about. When checking to see what stuff is Y2K compliant, are we missing a chip deep inside the mechanism? Making it tougher, some chips can't be tested! Y2K COMPLIANT Let's assume you have completed an exhaustive analysis of your firm. You tossed out all computers and bought new Pentiums. They are the ones with the 4 digit year date field no the old 2 digit DOODADS causing the problem. Now you are "most likely" Y2K compliant. Have you received written confirmation that all your suppliers are compliant? How do you really know? Have all your suppliers checked to see if all their suppliers are compliant? By the way, what exactly is the definition of "Y2K Compliant"? Wow this is a problem! SYSTEM VS CHIP We've been discussing the chip so far. Is your operating system compliant? What about all the miscellaneous software? Ok, you or your technicians fix the software. Are you subject to a derivative lawsuit for tinkering with licensed software? Changing source code void the warranty? Oh boy, Oh boy, Oh boy. IT’S NOT TOO LATE TO START WORK NOW The gurus have told us to have everything in place by October, 1997. Although that date has passed, it's not too late but you are going to have to hustle. You probably have a bunch of checklists already on this topic, but if not, call us and we'll send you one. It's a simple generic one. Use your imagination to further develop it specifically to your business. The first Y2K lawsuit has already been filed. How come we never had a Y1K problem? YEAR 2000 WEB SITES Here are a few sites we ran across with a lot
of good information you might find helpful: |
A business oriented site: