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Two lesser-known risks in the restaurant industry


July 26, 2018   by Jason Contant


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Besides the obvious liquor liability risk in the restaurant and bar sector, risk managers should also pay attention to cyber and sexual harassment risks, says a broker with Holmes Murphy who specializes in the area.

Over the past few years, risk managers in the restaurant space have started to realize that even if you are compliant with payment card industry (PCI) standards, having a cyber insurance policy in place would be a wise thing to do, Jay Gates told Canadian Underwriter Wednesday.

“Three, four, five years ago, that wasn’t the case,” said Gates, who up until this month was the risk manager for RMH Franchise Corporation, the second largest Applebee’s franchisee in the United States.

“I sat on many meetings with a lot of risk managers for some major brands that would answer that question with a ‘No’ if [asked if] they had a cyber policy,” he said. “I think most of the folks in the restaurant industry realize it’s not a matter of if you are going to get hit with a hacking situation, or [if] someone is trying to breach your cyber network, it’s a matter of when.”

Having experienced and navigated through a breach situation himself, Gates recommended that companies get cyber insurance, “even if it costs more than you’re willing to pay.”

Without cyber insurance, a breach is “a terribly expensive exercise to go through,” he said. “You don’t want to be that individual without cyber insurance when you get notification of a breach or compromised credit card information.”

The second piece of advice for risk managers in the industry is to have a “very updated policy on what’s an acceptable and not acceptable conversation” in the workplace, as it relates to sexual harassment. Gates noted that sometimes there can be “locker room talk” in the “back house” of a restaurant – behind-the-scene areas such as the kitchen and offices that a customer does not see.

A sexual harassment policy should come “top down” from leadership, since sometimes the policy applies not only to servers and cooks who are engaged in these conversations, but also the “assistant manager, shift manager [or] kitchen manager who’s sitting right there listening to the conversation, or is actually part of the deal.”

Gates said he has even seen situations where the host is 16 or 17 years old and “they are subjected to that kind of stuff and their parents go nuts over the conversations or the activities that happen at the back of the house or after work.”