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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. Types of Risks.

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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

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.

slide3

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
Check List

Flow chart

Risk Inspection

HAZOP

HAZAN

Fault Tree Method

Hazard Indices

risk evaluation

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.

risk analysis

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.

slide7

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

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

slide9

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

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 management1

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:

risk management2

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 management3

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 management4

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

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

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 for1

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 for2

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.