صفحه 1:
E-COMMERCE RISKS: RISK
MANAGEMENT
IN PROFESSIONAL INDEMNITY
KIT BURDEN
PARTNER, BARLOW LYDE & GILBERT
صفحه 2:
WELL, YOU WOULD SAY THAT WOULDN'T YOU...
صفحه 3:
ACTUAL CLAIMS AND LIABILITIES;
Virgin
Argos
۱:
ا ةا
British Gas
Norwich Union
YAHOO
3
3
3
3
3
3
صفحه 4:
CONTRACTUAL RISKS
Impersonal nature of transactions
Trade with unfamiliar/unknown parties
Incorporation of contractual terms
RISK MITIGATION:
(1) Structure of the Website
(2) Incorporate appropriate terms
(3) Keep under regular review
ae
فاق
صفحه 5:
JURISDICTIONAL RISKS
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RISK MITIGATION.
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فاق
صفحه 6:
DATA RISKS
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RISK MITIGATION:
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ae
فاق
صفحه 7:
CONTENT LIABILITY
0
+ Liability to third parties, e.g
فتاه حمتامههامه «
عاحمصهه وصتکصا 1۳1«
Dinette beet een
RISK MITIGATION:
eon nm agement eR entity
۱ كلتقصدة ده
(3)Disclaimers on website and hypertext links
ae
فاق
صفحه 8:
HOW DOES THIS IMPACT P.I.
INSURERS?
ات وت ۱۰۳۰۵۱۱۱۸۸
* E-commerce service providers (ISP’s, hosts, website
(وعموزوعل
* Management and IT consultants
* Professional advisors (lawyers, bankers, auditors)
* Directors and Officers
صفحه 9:
E-COMMERCE SERVICE PROVIDERS
Failure to perform likely to impact directly upon
customers
Quantum of loss for customers potentially high (owing
to reliance upon technology)
Emerging claims history, but still sketchy for new
services such as Trusted Third Parties
صفحه 10:
MANAGEMENT AND IT CONSULTANTS
۱ RUB meron ec meca COUT
+ زوع هوءكتصد ومه/لءتزقاعل غعوللتمة كاءوزهعم كذ كتستمك 6 0ودمص د
:ملرصمیی لمعناهطامم 13
(1) Consultancy A engaged to implement IT systems
underpinning new dot.com by 1 July 2001;
(2) Delays in implementation mean work not finished until
20۳
(3) Downturn in market in the meantime means dot.com
cannot do IPO to raise cash.
(4) Consultancy A sued for “lost opportunity”
ae
فاق
صفحه 11:
PROFESSIONAL ADVISORS.
All professional advisors need to be aware of the.
۳ which the web poses in order to provide proper
advice
Lawyers - need to be aware of risks posed by multi-
jurisdictional nature of the internet and widening body of
potential laws and regulations
Bankers - need to take care in way in which they provide
advice to dot.com and other e-commerce clients
regarding their finance requirements
Auditors - at risk in relation to audits of dot.com and
“new” valuation techniques (e.g. Amazon, e-district)
Brokers - need to be aware of what the risks are, so as to
advice insureds about the scope of cover offered by their
current portfolio and their potential future requirements
ESN
فاق
صفحه 12:
DIRECTORS AND OFFICERS
Duties: both common law and fiduciary
Must understand the risks in order to formulate a
risk/asset management strategy
Particular risks posed by dot.com crash: wrongful
trading under s.214 Insolvency Act 1986
Position of internet incubators?
صفحه 13:
Impact on the Claims Process
More likely to have foreign element
More likely to be facing unfamiliar laws/regulations
Expensive discovery process
Cultural impacts:
(1)use of email internally
(2)use of the internet as a tool in the litigation
صفحه 14:
THANK YOU
E-COMMERCE RISKS: RISK
MANAGEMENT
IN PROFESSIONAL INDEMNITY
KIT BURDEN
PARTNER, BARLOW LYDE & GILBERT
BLG
WELL, YOU WOULD SAY THAT WOULDN’T YOU…
BLG
ACTUAL CLAIMS AND LIABILITIES;
Virgin
Argos
IBM
Demon Internet
British Gas
Norwich Union
YAHOO
BLG
CONTRACTUAL RISKS
Impersonal nature of transactions
Trade with unfamiliar/unknown parties
Incorporation of contractual terms
RISK MITIGATION:
(1)
Structure of the Website
(2)
Incorporate appropriate terms
(3)
Keep under regular review
BLG
Delivery Risks
JURISDICTIONAL RISKS
where is the customer located?
what are the implications of delivery?
Regulation
attitude of the UK regulators
foreign regulation
Law and Venue
“long arm” jurisdictions
where are you trading?
RISK MITIGATION:
(1)
Consider targeting specific markets
(2)
Carry out local legal reviews for select markets
(3)
Incorporate choice of law/jurisdiction clauses
BLG
DATA RISKS
Key importance of data
Data Protection Act 1998 – the new regime
Key requirements:
notify purposes for which data will be used
keep data up to date and accurate
maintain security
restrictions on transborder data flows
RISK MITIGATION:
(1) Ensure proper notifications made
(2) Use data only for authorised purposes
(3) Inform data subjects of purposes for which data is gathered
(4) Prepare a data retention/update policy
(5) Maintain adequate levels of system security
(6) Ensure adequate contracted protection for transfers out of the E.U
BLG
CONTENT LIABILITY
Acts by employees
Liability to third parties, e.g
defamation claims
IPR infringements
domain name claims
RISK MITIGATION:
(1)Company policy on internet usage and e-mail
(2)Disclaimers on e-mails
(3)Disclaimers on website and hypertext links
BLG
HOW DOES THIS IMPACT P.I.
INSURERS?
E-commerce risks affect:
E-commerce service providers (ISP’s, hosts, website
designers)
Management and IT consultants
Professional advisors (lawyers, bankers, auditors)
Directors and Officers
BLG
E-COMMERCE SERVICE PROVIDERS
Failure to perform likely to impact directly upon
customers
Quantum of loss for customers potentially high (owing
to reliance upon technology)
Emerging claims history, but still sketchy for new
services such as Trusted Third Parties
BLG
MANAGEMENT AND IT CONSULTANTS
Heavily involved in E-commerce revolution
Exposed to claims if projects fail/get delayed/are misconceived
Hypothetical example:
(1) Consultancy A engaged to implement IT systems
underpinning new dot.com by 1 July 2001;
(2) Delays in implementation mean work not finished until
now;
(3) Downturn in market in the meantime means dot.com
cannot do IPO to raise cash.
(4) Consultancy A sued for “lost opportunity”
BLG
PROFESSIONAL ADVISORS
All professional advisors need to be aware of the
challenge which the web poses in order to provide proper
advice
Lawyers – need to be aware of risks posed by multijurisdictional nature of the internet and widening body of
potential laws and regulations
Bankers – need to take care in way in which they provide
advice to dot.com and other e-commerce clients
regarding their finance requirements
Auditors – at risk in relation to audits of dot.com and
“new” valuation techniques (e.g. Amazon, e-district)
Brokers - need to be aware of what the risks are, so as to
advice insureds about the scope of cover offered by their
current portfolio and their potential future requirements
BLG
DIRECTORS AND OFFICERS
Duties: both common law and fiduciary
Must understand the risks in order to formulate a
risk/asset management strategy
Particular risks posed by dot.com crash: wrongful
trading under s.214 Insolvency Act 1986
Position of internet incubators?
BLG
Impact on the Claims Process
More likely to have foreign element
More likely to be facing unfamiliar laws/regulations
Expensive discovery process
Cultural impacts:
(1)use of email internally
(2)use of the internet as a tool in the litigation
BLG
THANK YOU
BLG