1. Understanding and Taking Risks Presented By: Steve Felker 287846 03/2011

2. “The revolutionary idea that defines the boundary between modern times and the past is the mastery of risk: the notion that the future is more than a whim of the gods and that men and women are not passive before nature. This book tells the story of a group of thinkers whose remarkable vision revealed how to put the future at the service of the present. By showing the world how to understand risk, measure it, and weigh its consequences, they converted risk-taking into one of the prime catalysts that drives modern Western society.” Against The Gods, The Remarkable Story of Risk by Peter L. Bernstein 2

3. What are your firm’s greatest “hazard” Risks? Automobile/vehicle accidents Damage to buildings, personal property and other physical assets General liability and product liability claims Employment related claims Breach of your fiduciary duties under ERISA Occupational injuries to your employees (and independent contractors) Employee theft…fraud Pollution/environmental claims Directors & Officer suits Professional Liability (malpractice) claims, for professional services firms Breach or release of confidential information 3

4. Auto Exposures Liability for operating owned vehicles Liability for employees (or others) operating their vehicles on your company business Liability for hired or rented vehicles Physical damage to the vehicles in any of the above scenarios Managing these exposures Check MVRs – all operators Obtain certificates of insurance Establish corporate procedures/policies on auto usage Insurance required – but are you buying enough? 4

5. Physical Assets Exposures Damage to these assets (Fire, theft, water damage, transit loss, power surge, equipment breakdown, earthquake, flood…) Resulting business interruption (loss of earnings, extra expenses incurred) Contingent Business Income (e.g. Japan) Managing these exposures Loss prevention/mitigation (maintenance/upkeep, good housekeeping, sprinkler system, alarms, computer backup, supply chain management, other contingency plans) Disaster recovery plan Buy enough insurance (relatively inexpensive) 5

6. General Liability Exposures Liability for your operations (bodily injury or property damage claims from third parties) Liability for your products or completed operations Liability for personal injury or advertising injury Liability for damage to property in your care, custody and control Managing these exposures Safety and loss prevention procedures and guidelines Transfer responsibility by contract to your vendors and subcontractors Certificates of insurance from all vendors and being named as additional insured Insurance generally required – do you have enough? 6

7. Employment Practices Liability Exposures Employment related suits or claims: wrongful termination, discrimination, harassment… Both 1 st party and 3 rd party Managing these exposures: Employment practices/procedures Buy enough limits (and, understand what is not covered) 7

8. Fiduciary Liability Exposures Suits brought against plan Trustees and administrators (“Fiduciaries”). Under ERISA “Fiduciaries” are held personally liable Mistakes or errors made in administering benefit plans (Employee Benefit Liability Insurance) Managing this exposure: Careful review, selection and ongoing management of service providers. Buy Fiduciary Liability Insurance 8

9. Workers’ Compensation Exposures Occupational injuries to employees (and independent contractors), including lost time. Employers Liability claims (e.g. “action over” claims) Managing these exposures WC is mandatory, by state Include/exclude officers Experience modification Safety program/safe working environment/ergonomic assessment Return-to-work program 9

10. Crime Exposures Employee theft… Other crime losses: depositors forgery, computer fraud, funds transfer fraud, counterfeit currency, money and securities ERISA bond Managing these exposures Strong internal controls Buy Insurance 10

11. Pollution Exposures Pollution claims – present and past Including mold…coverage both on site and off site Managing these exposures Numerous funding vehicles available to cap/control polluted sites and purchase coverage for future claims 11

12. Directors & Officers Exposures Management liability suits against the firm and individual D&Os For public, private and non profit firms Managing these exposures Strong governance practices Purchasing insurance 12

13. Professional Liability Exposures A professional failing to provide the correct oversight or advice, resulting in financial loss Managing this exposure Best practices of individual profession/following professional standards 13

14. Data Privacy and Security Exposures Liability for the release of confidential customer or employee data. Breaches can be either electronic or paper – lost thumb drive, laptop, paper records – 1 st Party and 3 rd Party Notification costs, remediation (credit repair), extortion demands Managing these exposures Internal controls and careful management of data Buy insurance if there is an exposure 14

15. Contact Us Steve Felker Principal 847 457-3213 Steve.Felker@gcgfinancial.com Corporate Headquarters GCG Financial, Inc. 3000 Lakeside Drive Suite 200 South Bannockburn, Illinois 60015 847 457-3000 www.gcgfinancial.com