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.
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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
Material Risk- Building,Plant & Machinery,Furniture,Fixtures,fittings,Stocks.
Consequential Risk- Loss of production,Loss of profit,Loss of market,Good will.
Legal Risk- Product liability,Public liability.
Political Risk- Subsidies,Sanctions etc.
Economic protection of Company’s Assets, Earnings & Liabilities.
Risk Management Process
Identification of Risk
Some are Quantitative,Some are Qualitative
Fault Tree Method
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.
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
Reduce probability of loss and its severity.
Most important for RM process.
Risk Reduction / Prevention can be from –
Fire protection / Detection
Charge losses against normal operation cost.
Borrow the cost of any loss, repaying over agreed period.
Risk Transfer : To insurers – Pure risks
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
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:
Thus, Risk Management principals for small and large risks are more or less same.
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
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 Manager should look into overall view of the risk.
Co-ordinate with various Line Managers to get the same.
The main sources of ignition involved in almost all industries are:
Heat of Cutting
Spontaneous Oxidation from Grinding
Hot surfaces such as furnaces etc.
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.
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.
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.
SHE policy/Maintenance philosophy
Enforcement of work permit system (Hot/ Cold /electrical/at heights etc.)
General housekeeping (Orderliness and cleanliness.)
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.