A thorough and thoughtful risk management plan is the commitment to prevent harm and is a pre-loss exercise. Insurance comes post-loss and pays for the damages if the risk were to occur. Residual risks are the inherent risks that remain after the implementation of the risk management plan. It is the basis of risk underwriting.
There are essentially FIVE (5) basic risk management principles: identification, analysis, control, financing, and claims management with objectives similar for industry, private, and government sectors. These areas are summarized below:
- Reduce and Eliminate Harmful Threats.
- Supports Efficient use of Resources.
- Better Communication of Risk within Organization.
- Reassures Stakeholders.
- Support Continuity of Organization.
Governments, Financiers, and Insurance Companies have adopted performance benchmarks for risk management and underwriting especially were about the protection of Life, Environment, and Assets. These are guided by codes and standards relevant in different jurisdictions. Common codes and standards include BS, ASME, IEC, OSHAS, API, NFPA, ISO, IBC, etc.
Also Read: INHERENT RISK IN THE CONSTRUCTION SECTOR
Operational Risk Management for Safety and Security is a multidisciplinary service encompassing Life & Fire Safety Environmental & HSE-MS, Technical & Process Safety consulting, and contracting. Risk management is best embedded in the concept phase of any project by the Architects and Project Managers. They work with qualified specialists to ensure passive and active risk management philosophies that guide the deployed strategies in other phases.
This approach negates project cost variation while ensuring User and Legal Requirements by the Authority Having Jurisdiction are met in the facility design, construction, and operations. With these risks is brought to as low as reasonably practicable (ALARP), the residual risks are transferred to third parties. Insurance companies underwrite the residual risk. The gains in adopting a sound risk management plan pay for themselves in reduced premium over time. Other benefits include compliance, reputation, and business continuity. This case is too often missed by Project Managers.
With over 13 years serving the African region in this niche service, we at Safety Consultants and Solution Providers Ltd encourage Architects, Financiers, Project Managers, Insurance and Owners conscious especially this critical requirement especially if these scenarios apply:
- Brand Affiliation: Reputational risk management criteria include Safety and Security risk management benchmarks. These form the requirements for brand association. A great example of brands with brand requirements is Hilton, Sheraton, Radisson Blue, etc.
- Insurance Requirements for Under Writing – Insurance companies should be consulted with required mandates and benchmarks for underwriting risks on the project. In the health care sector, insurance companies covering the health care sector like BUPA have requirements facilities must meet in the health care sector insurance companies covering the.
- User Requirements: Many Facilities have been built that failed Compliance Benchmark detailed in the user requirements.
Also Read: BENCHMARK AND SECURITY RISK MITIGATION IN ALL FACILITIES
All the risk studies cumulate to a safety case that demonstrates that safe operational mandates have been adequately met before facility operation. In the Oil and Gas sector, these are mandatory requirements commonly set by regulators like DPR, NAPIMS, etc. for process safety management (PSM) For Life and Fire Safety Services an approved Master Plans are required. These documents provide the basis for third-party risk transfer by technical underwriters. It is the basis for premium calculations.
Antonia Beri
Lead Consultant / Safety Consultants and Solution Providers Ltd
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