Transcript Risk Management

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
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.
•Risk Management
•Economic protection of Company’s Assets,
Earnings & Liabilities.
•Risk Management Process
•Identification of Risk
•Various Methods
•Some are Quantitative,Some are Qualitative
•Check List
•Flow chart
•Risk Inspection
•HAZOP
•HAZAN
•Fault Tree Method
•Hazard Indices
Risk Evaluation
• Arrange them in order of priority
• Provide information for deciding the
most appropriate way of handling.
Ranking risks according to :
1. Frequency of loss ; and
2. Potential severity of loss.
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.
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
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
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
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
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:
Mom and Pop
Business
Light at night to
prevent Burglary
House Keeping
Loss Finance from
Insurance Proceeds
Withdrawal of
savings
Loan from Banking
Large Risk
Burglary Alarms,
Surveillance,
Petrol’s, Electronic
Sensors
House Keeping
Loss Finance from
Insurance Proceeds
Surplus (Savings)
Loan from Bank
Thus, Risk Management principals for small and large risks are more
or less same.
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
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.
Risk Management
•Risk Manager should look into overall view
of the risk.
•Co-ordinate with various Line Managers to
get the same.
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
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.
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.)
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.