Category Archives: Risk Management

by | July 7, 2011 · 6:35 am

Hospitality Industry Guest Room Security: Large Hotel Operator Converts Rooms To "Electronic Lock System", Replacing Mechanical Card Locks As "Magnetic Strip Keycards" Provide "Full Audit Accountability"

  • Each keycard is encoded using a portable Front Desk Unit (FDU), uniquely designed for the hotel industry
  •  The magnetic strip keycard reader provides full audit accountability, enabling management to provide legal support in the event of unauthorized access to a room.
  • For emergency use the Generation E-760 door locks provide emergency access through a mechanical key (fixed or recodable) or electronic override plus an emergency keycard.
 
La Quinta Inns & Suites has announced an agreement with Kaba to install the ILCO 760 locking systems in approximately 140 La Quinta hotels. Implementation will begin in fall 2011.
 
“KABA ILCO products demonstrate the reliability that La Quinta wants for its operators and guests,” says Gerald Rodriguez, vice president of purchasing for LQ Management L.L.C. “We were also impressed with KABA’s willingness to engage in a long-term partnership with La Quinta. This will enable us to provide security to our guests, and professional service and operational excellence to our hotels and their staff into the future.”
 
La Quinta began evaluating electronic lock system providers to replace its mechanical card locks in early 2010. This effort included field testing locks from several manufacturers to verify the best solution for La Quinta’s hotels. After testing, La Quinta chose KABA ILCO 760 locks and the Front Desk Unit (FDU).
 
 

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by | July 6, 2011 · 8:23 am

Hotel Industry Pool Safety: Risks Of Dangerous "E. Coli" Outbreaks In Hotel Pools Increase As Chlorine Levels Decrease, pH Levels Rise Due To "Sunlight, Dirt And Material From Swimmers' Bodies"

“Because of the risk for outbreak of illness, it is essential that public pools and water parks follow Centers for Disease Control and Prevention guidelines for adequate chlorine and pH levels.”

Sunlight, dirt, debris and material from swimmers’ bodies can all reduce chlorine levels in pool water. That is why chlorine levels must be routinely measured. As pH goes up, the ability of chlorine to kill germs goes down, so pH levels also need to be tested. Specific regulations regarding testing timetables and testing procedures would prevent illness.

“…E. coli O157 can cause severe dehydration, hemorrhagic colitis (may require removal of part of the colon), and hemolytic uremic syndrome (HUS), sometimes referred to as E. coli kidney failure. In addition to uremia and renal failure, HUS can cause seizures, strokes, encephalopathy, acute respiratory distress syndrome, heart attack and heart failure, blindness, paralysis, pancreatitis and death…”

E. coli attorney Fred Pritzker is calling for better regulations for public swimming pools after fifteen people were sickened at the Opelika SportsPlex and Aquatic Center in Opelika, Alabama. Parents should be able to bring their children to a public swimming facility without the children getting exposed to E. coli O157 or another dangerous pathogen,” said Pritzker. “Better regulations regarding chlorine and pH testing would help prevent E. colioutbreaks.”

To date, thirteen children and two adults who either played in the Splash Park or swam in the pool at the Opelika SportsPlex and Aquatic Center between June 4 and June 22 were identified with severe gastrointestinal illness consistent with E. coli O157 poisoning. Five children have been confirmed positive for E. coli O157:H7 infection.

Four children were hospitalized, and two remain hospitalized. “Based on the information that we have now, it appears that the common source of exposure was the Aquatic Center,” said State Health Officer Dr. Donald Williamson.

For more:  http://www.businesswire.com/news/home/20110630006874/en/E.-coli-Lawyer-Calls-Regulations-Wake-Opelika

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by | July 5, 2011 · 8:22 am

Hospitality Industry Information Security Risks: Hotel Computer Systems Are Increasingly "Breached" Through "Privileged Users" Who Have Total Access To Sensitive Data

“..security breaches are still happening at an even more significant pace with more damaging results.  In the end, many of these advanced intrusions and data security breaches are focused on taking over access to the accounts and permissions of specific “privileged” users in an organization who have access to sensitive data…”

“…These privileged users are specifically targeted by outside hackers because they have proverbial keys to the kingdom, but in some cases the inside user themselves is intent on stealing or doing damage…” 

One solution that is emerging to this problem is to carefully monitor everything (e.g. every key stroke and every mouse click) that a privileged user does on the network, while also putting more granular limits on what they can do.  Basically “trust but verify,” with the goal being detecting any anomalies in a privileged user’s computing usage (e.g. why is this person downloading the source code at 3 a.m.?).  This is not uncommon as it relates to other privileged users in other jobs — the “Eye in the Sky” in the casinos in Las Vegas is equally monitoring the gamblers for cheating but is also monitoring the dealers, and at a bank the CCTV is not only looking for robbers but the teller slipping some money in their pocket.

Instructive of the value of this new approach is that immediately after its breach, the RSA division of EMC acquired private company Netwitness for a reported large premium.  Netwitness is known for analyzing user activity monitoring at the network layer.  In addition, the latest security vendor to file for an IPO, Imperva, has as its core solution the ability to monitor database access and usage by Database Administrators, another type of privileged user.

For more:  http://blogs.forbes.com/tomkemp/2011/07/05/as-hacks-proliferate-new-security-technology-emerges-to-monitor-privileged-it-users/

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by | July 1, 2011 · 10:17 am

Hospitality Industry Structural Risks: Texas Hotel Remains Closed As Repair Crews Replace "Glass Balcony Panels" Which Had Fallen And Injured Guests By Pool

“…12, two-man repair crews have begun to remove glass balcony panels. By 5 p.m. Thursday, about 600 glass panels on the north, south, east and west sides of the building had been removed from the balcony frames and secured. Meanwhile, temporary engineered wood panels were prepared for installation on each balcony…”

At about 8 p.m. Wednesday, barricades, flashing police car lights and TV station vans surrounded the normally life-filled W Austin Hotel and Residences. The luxury brand is usually a beacon of fun, sending the sounds of music, drinking and conversation down the busy Second Street District.

Engineers and experts continue to investigate why glass came tumbling down from the tower, forcing one of Austin’s most talked about destinations to close just before the busy July Fourth weekend.

For more:  http://www.bizjournals.com/austin/blog/big-picture/2011/06/w-austin-hotels-life-after-falling.html

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by | June 30, 2011 · 8:16 am

Hospitality Industry Theft Risks: New York Hotel Has Valuable Painting Stolen From Lobby As "Surveillance System" Identifies Man Walking Out With Covered Object

“…A video surveillance shows a man walking into the swanky building then coming out a short time later with a bag not visible in the first clip”…

An art thief made off with a painting worth a reported $350,000 from the Upper East Side’s posh Carlyle Hotel early Tuesday morning. The Fernand Leger painting, which went missing from the lobby hallway, was on loan from the Helly Nahmad Gallery located inside the hotel’s swanky Madison Avenue building.

“The Carlyle’s security personnel reported the painting missing at 3:30 a.m. to the 19th Precinct as well as the gallery owner,” a hotel spokeswoman said. “A complete investigation is now in process.”

The 1917 ink-on-linen by Leger — a French artist who was part of the Cubism movement — was apparently only 10-inches-by-8-inches. The Madison Avenue landmark, a favorite for presidents and prime ministers, boasts of itself as “a showcase great art, a purveyor of privacy and a sanctuary of luxury and refined taste,” on its website.

Read more: http://www.dnainfo.com/20110629/upper-east-side/art-thief-swipes-fernand-leger-painting-at-carlyle-hotel#ixzz1QmBxtyM0

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by | June 28, 2011 · 1:15 pm

Hospitality Industry Insurance Risks: "Employment Practices Liability Insurance" May Contain "Exclusions For Intentional Acts" That May Deny Coverage To Hotel Executives In "Disparated Treatment And Sexual Harassment" Cases

“…a panel of arbitrators found that (the executive)  “was well acquainted with the company’s policy on sexual harassment and other acts of inappropriate conduct.”  They further found that (the executive)  “did not comply with the policy on sexual harassment and that his refusal was willful.” 

“…attorneys should remind their clients to carefully review their existing EPLI policies and to understand all exclusions that may apply, as well as to be mindful of such exclusions when negotiating the purchase of a new EPLI policy…”

Exclusions typically found in EPLI policies include exclusions for Fair Labor Standards Act claims, National Labor Relations Board decisions, ERISA matters, costs of complying with accommodations mandated by the Americans with Disabilities Act, and claims arising out of facts or circumstances known to the employer before the effective date of the policy.  Another possible exclusion is for intentional acts.  This exclusion generally is intended to eliminate coverage if an employer acts with “wonton, willful, reckless, or intentional disregard for any laws.” This exclusion is a carryover from other policies traditionally offered, including commercial general liability policies and workers compensation policies.

The question that arises is whether an intentional acts exclusion precludes coverage for disparate treatment or sexual harassment claims.  By their very nature, disparate treatment and sexual harassment require some type of intentional conduct.  If the intentional acts exclusion is interpreted broadly enough, an allegation of disparate treatment or sexual harassment may provide the insurer grounds for denying coverage under the policy.

For more:  http://www.lexology.com/library/detail.aspx?g=54d3b2ac-48f1-497b-ac65-ee0e32826815

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by | June 27, 2011 · 11:35 am

Hospitality Industry Fire Risks: Florida Hotel Is Nearly Destroyed By Fire Caused By Faulty Electrical System And Faulty Sprinklers, Extinguishers Fail To Work

“…the building had a series of problems, including a broken sprinkler system, empty fire extinguishers and smoke detectors without batteries…the building had electrical problems, too, including a sparking outlet in his room. The motel capped the outlet instead of fixing it…”

“…the fire spread from single room, got into the attic and raced throughout building, destroying nearly everything…”

A fire that caused the roof to collapse and burn through a wing of a 430-room Kissimmee motel late Sunday is still burning this morning. Eight people, including two firefighters, have been hospitalized from injuries caused by the blaze at the Vacation Lodge, which essentially functioned as an apartment complex.

The fire investigation, which will likely start Tuesday, will look into the alleged problems with the sprinkler system. Micheal White, who paid $135 a week to live in Room 1230, said he heard an explosion in Room 1305 before the fire broke out.

He said the motel has been in news recently after the water was shut off for 27 days for nonpayment.  He did not know if complex was built with firewalls designed to contain fires.

For more:  http://www.chicagotribune.com/news/nationworld/os-kissimmee-hotel-fire-20110626,0,2952712.story

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by | June 26, 2011 · 5:59 pm

Hospitality Industry Employee Risks: Hotel Management Should Use Employment Contracts Which Are "At Will", Do Not Discriminate And Define Scope Of Employment; Comprehensive Insurance Should Be In Place At All Times

Hotel Management and owners should set up uniform employment contracts, which:

  • Do not discriminate against people based on any of the protected classes as defined by federal or state law;
  • Define the scope of the employment;
  • Say if the employment is for a term or “at will”;
  • Assign the pre-corporate formation intellectual property to the company;
  • Assign all subsequently created intellectual property to the company; and
  • Protect the corporate intellectual property from disclosure.

The last two categories of protecting intellectual property of the company can be accomplished by drafting non-disclosure agreements, and Proprietary Invention Assignment Agreements.

Insurance – Getting insurance for your company is a bet worth taking, given the potential unpleasant surprises of not being prepared. Again, your needs will vary depending on your company, but among the standard offerings are:

  • Comprehensive General Liability Policies (“CGL”) – A CGL policy is usually geared towards protecting a company from personal injury;
  • Directors and Officers (“D&O”) Insurance – D&O insurance may cover the wrongful acts of the officers and directors of a company;
  • Advertising Injury Insurance – Insurance that covers defamation, invasion of privacy, copyright infringement and other intellectual property injuries. (The advertising injury is usually a part of a larger policy, like a CGL, and not a policy onto itself.); and
  • Employment Practices Liability Insurance (“EPLI”) – The EPLI is a specialized insurance policy protecting companies against employment lawsuits.

For more:  http://venturebeat.com/2011/06/27/4-legal-pitfalls-startup-owners-must-face/

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by | June 24, 2011 · 4:35 pm

Hospitality Industry Credit Card Risks: Man Who Stole Texas Hotel Guests' "Credit Card Receipts" And "Manufactured Counterfeit Cards" To Purchase Merchandise Sentenced To Five Years In Prison

“…Authorities said Jones and another man, Randy Ray Flaharty, 31, took boxes of monthly credit card receipts of hotel guests from a storage room…”

“…The receipts, officials say, were used to manufacture counterfeit credit cards in document “boiler rooms” and card “chop shops,” which they then used to buy $300,000 worth of merchandise in Texas, Oklahoma and Louisiana...”

“…The cardholders never realized their credit card accounts had been compromised until months, even years, after they stayed at the hotel. But the damage made it hard for some of them to get loans and left lingering headaches in trying to straighten things out, officials said…”

A San Antonio man was sentenced Friday to more than five years in federal prison for stealing thousands of credit card receipts from the Emily Morgan Hotel. The theft allowed conspirators to buy hundreds of thousands of dollars worth of merchandise in three states, authorities say.

Cody Quincy Jones, 34, pleaded guilty in April to ID theft fraud, access device fraud, and aggravated ID theft. Chief U.S. District Judge Fred Biery gave him 41 months for the ID theft fraud charge and 41 months for the access device count, to run concurrently. The judge imposed 24 months on the aggravated ID theft charge, to run consecutively.

The merchandise, which included trailers, televisions, all-terrain vehicles and tires, then was resold or pawned.

The hotel didn’t learn of the thefts until August 2008, and since then, a Secret Service-led task force has ascertained it was San Antonio’s largest identity theft case, with at least 17,000 receipts stolen.

Read more: http://www.mysanantonio.com/news/local_news/article/Conspirator-in-record-setting-I-D-theft-sentenced-1439169.php#ixzz1QF7XXhYu

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by | June 23, 2011 · 6:54 am

Hospitality Industry Employee Risks: Hotel Management Must Maintain "Employment Practices Liability Insurance" To Protect Against Expensive Litigation Defending "Frivolous" Employee Lawsuits; "Arbitration Agreements As Conditions Of Hiring" Also Helpful

“…based on the new case law, an employer that wins in court can’t even recover attorney fees for frivolous claims, if they overlap with other claims that are viewed as “non-frivolous.”

“…Employment Practices Liability Insurance (“EPLI”) can be purchased, but it often comes with a large deductible (up to $50,000 or more), so it is important to know what you are buying…”

“…Employers can also limit the impact of litigation by requiring new employees to sign arbitration agreements as a condition of being hired..”

That was the ruling last January in a federal court in California. The employer spent $315,000 in attorney fees, and prevailed on each of the ten claims in the lawsuit. The judge found that some of the claims were frivolous, and allocated $85,000 to the employer as reimbursement for the frivolous claims. The 9th Circuit (which also governs federal cases in Oregon) reversed on appeal because the employer didn’t prove that those fees were incurred solely in defense of the frivolous claims. This month, the U.S. Supreme Court made the same ruling in another civil rights case.

So what can employers do to minimize the risk of a devastating loss? Many employers are surprised to learn, after it’s too late to do anything about it, that general liability insurance does not cover discrimination claims. Employment Practices Liability Insurance (“EPLI”) can be purchased, but it often comes with a large deductible (up to $50,000 or more), so it is important to know what you are buying.

Employers can also limit the impact of litigation by requiring new employees to sign arbitration agreements as a condition of being hired. Under these agreements, both sides agree in advance that any employment-related claims will be resolved in arbitration rather than in court. Litigating before an arbitrator tends to be faster and less expensive than court trials. Currently, an Oregon statute requires an employer to tell an applicant about the arbitration agreement 14 days before hiring. A bill is making its way through the Oregon Legislature that would reduce this time period to 72 hours. These agreements need to be carefully drafted to be enforceable.

Read more: Protect against discrimination lawsuits – Oregon Business http://www.oregonbusiness.com/contributed-blogs/5451-changing-rules-for-discrimination-lawsuits#ixzz1Q6ve56Ao

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