Risk Management

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Risk Management

• Risk- Uncertainty of occurrence of any unforeseen
  event
• Pure Risk- Always leads to loss
• Speculative Risk- May Result in loss or Gain
• Static Risk- Results in loss
• Dynamic Risk- May Result in loss or Gain
• Commercial Trade Risk
• Insurable Risk

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Types of Risks

• Material Risk- Building,Plant
  Machinery,Furniture,Fixtures,fittings,Stocks.
• Consequential Risk- Loss of production,Loss of
  profit,Loss of market,Good will.
• Social Risk
• Legal Risk- Product liability,Public liability.
• Political Risk- Subsidies,Sanctions etc.

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• Risk Management
• Economic protection of Companys Assets, Earnings
  Liabilities.
• Risk Management Process
• Identification of Risk
• Various Methods
• Some are Quantitative,Some are Qualitative

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• Check List
• Flow chart
• Risk Inspection
• HAZOP
• HAZAN
• Fault Tree Method
• Hazard Indices

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Risk Evaluation

• Arrange them in order of priority
• Provide information for deciding the most
  appropriate way of handling.
• Ranking risks according to
• Frequency of loss and
• Potential severity of loss.

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Risk Analysis

• Risk and Human behavior looks into psychology of
  risk.
• How others look at the risk?
• How they behave in the face of risk?
• How they behave in groups?
• Perception of Risk.

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• Risk analysis is to be carried out with proper
  perception of risk of risk and cost involved in
  Analysis.
• Not to stick to one method
• Understand company and industry
• Should be financially reasonable
• Accurate record keeping
• Amount of imagination of required

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Risk Reduction / Loss Prevention

• Reduce probability of loss and its severity.
• Most important for RM process.
• Risk Reduction / Prevention can be from
• Loss prevention
• Safety
• Fire protection / Detection
• Environmental protection

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• Risk Retention If,
• Charge losses against normal operation cost.
• Contingency fund.
• Borrow the cost of any loss, repaying over agreed
  period.
• Risk Transfer To insurers Pure risks

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Risk Management Common Sense

• Disproportionate Emphasis on Risk Finance like
• Self Insurance Alternatives
• Non-Insurance option of Retention
• Assumption of Loss by Numerous Techniques
• But not much attention on Loss prevention, Safety
  and Loss control

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Risk Management

• On going plan to avoid circumstances and events
  that can cause loss Minimize the operational
  and financial impact of loss, should it occur.
• Thus it includes loss prevention and loss finance

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Thus, Risk Management principals for small and
large risks are more or less same.
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Risk Management

• It involves Insurance But is more than Insurance
• It is specified part of financial management but
  is more than that
• It may require knowledge of chemical processes,
  Fundamentals of Fire Engg. Physical properties of
  Different materials But is more than that

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Risk Management

• Requires Statistical Techniques But is more than
  Loss Statistics
• Thus RM involves Multi-Disciplinary Approach.
• Insurance Managers, Fire Engineers, Statisticians
  and the like are Dealing with many Aspects of
  Risk But no one takes overall view of Risk.

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Risk Management

• Risk Manager should look into overall view of the
  risk.
• Co-ordinate with various Line Managers to get the
  same.

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Sources of Ignition

• The main sources of ignition involved in almost
  all industries are
• Smoking
• Heat of Cutting
• Spontaneous Oxidation from Grinding
• Welding
• Cutting
• Hot surfaces such as furnaces etc.
• Electrical sparking
• Arching
• Impact ignition

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Risk Exposure Data What to Look for ?

• Layout of the Plant.
• Interconnectivity of roads/ accessibility.
• Proximity to Fire Stations/ Police Station/
  Hospital.
• Condition/ location and number of Emergency
  Exits/ Stairs/ Gates.
• Earthquake Exposure of the Buildings.(Seismic
  Zone)
• Flood/ Inundation Exposure.
• Landslide/ Rockslide Exposure.
• Terrorism Exposure.
• Proximity to Water Bodies River, Lake, Sea,
  Drains etc.
• Internal External Drainage System.
• Congestion at the Site.
• Employee Employer relations (Industrial
  Relation)
• Type of labour employed young/ mature
  skilled/ unskilled..
• Condition of Raw/ Process/ Intermediate
  Finished Materials stored Flammable/ Hazardous.
• Major Changes in the future/ near past.

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Risk Exposure Data What to Look for ?

• Neighboring occupancies their exposure.
• History of Natural disasters/ AOG Perils Flood/
  Eq./ Landslide/ Storm etc.
• General law order political situation in the
  area.
• Terrorism exposure in the area.
• Adherence to No Smoking Regulation.
• Installation of FEAs their adequacy and
  placement their maintenance.
• General Awareness of the employees and their
  training regarding FEA appliances installed/
  their usage.
• Presence of Trained full time Safety Fire
  Officers Staff.
• ISO Certifications
• SHE policy/Maintenance philosophy
• Enforcement of work permit system (Hot/ Cold
  /electrical/at heights etc.)
• General housekeeping (Orderliness and
  cleanliness.)

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Risk Exposure Data What to Look for ?

• Management awareness involvement in safety and
  security matters.
• Quantity and quality of security staff..
• Regulation of entry and exit of persons,
  vehicles, trucks materials.
• Source of water and quantity of storage facility.
• Condition of electrical wiring and installations.
• Condition of machinery, their maintenance,
  hazards involved with them, presence of qualified
  personnel to handle them.
• Condition of electrical equipment, their
  maintenance and presence of qualified personnel
  to handle them.
• Condition of Buildings their construction.
• Condition and construction of Boundary Wall.
• Exposed openings and presence of combustible
  materials.
• Quantity of Fire load.
• Presence of forest/ bushes/ vegetation in the
  vicinity.

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