Risk Assessment
– It’s necessity
7th August, 2014
Parag Gupta
Executive Vice President
Head – Commercial Line
IFFCO Tokio General Insurance
Risk Management
The Identification , Evaluation and
Economic control of those risks
which can threaten the assets,
human being or earning capacity
of an enterprise.
Risk Assessment !!!
Identification and
Evaluation of Risks around
us…
Risk Assessment
We are surrounded with potentially damaging
physical event, phenomenon or human activity
that may cause the loss of life or injury, property
damage, social and economic disruption or
environmental degradation.
If Identified and Evaluated at the earliest can
prevent or diminish quantum of a future damage /
loss.
Fire & Explosion!!!!
China Automobile part
manufacturing unit
explosion/ fire
Recent
one??? Any
guesses
Fire
Boil-over
Milford Haven
August 1983
Loss: $30 Mn
Vapour cloud explosion
UVCE
Sarawak
December 1997
PD 282 M$ US
Vapour cloud explosion
UVCE
Norco, Louisiana
May. 1988
FCC Unit
PD 314 M$ US
Explosion (BLEVE)
BLEVE
Feyzin, France
Jan. 1966
LPG Sphere Tanks
Operation
Explosion (BLEVE)
BLEVE
Mexico City
Nov. 1984
LPG Tanks
500-600 died
Explosion
force of
detonation was
equivalent to 40
tones of TNT.
Loss amount is
roughly Euro 1.8
bn. 30 people
were killed and
500 injured.
Fire
Office building
fire
Fire
French bank
building
May, 1996
Marine
Oil Rig sank in
Brazil
15th March,
2001
Property loss $496m
Marine
The tanker broke
into two because
of heavy seas and
sank at a dept of
3600m about 137
sea miles from
Spanish coast.
loss was about
US$36m.
Marine
Collision occurred
between a car
transporter
Tricolor and a
container ship
kariba. The tricolor
sank soon
containing 2862
BMWs, Saabs and
Volvos and 77
containers. Overall
loss amount was
euro 55 million.
Risk Assessment
Smoking Material
Sources of Fire
Gas
Oil
12%
5%
5%
7%
Unspecified fuels
6%
8%
17%
Electrical
Appliances &
Installations
Spontaneous
Combustion
11%
29%
There is a lot
we can do to
control these
sources…
Mechanical Heat &
Spark
Cutting and
Welding
Misc. Causes
Oh. It’s
a Snake
Let
me
Kill it
Oh. It
was
tail of
a tiger
Risk Assessment
• Following are the basic elements we
may consider for Risk Assessment:
– Management
– Construction
– Occupancy
– Protection
– Exposure
MCOPE
Risk Assessment
MANAGEMENT
CONSTRUCTION
• Management policies to ensure safety and loss
prevention..
• Issues in layout for factory facilities,
Construction Aspect, fire-resistance of
buildings, fire separations etc.
OCCUPANCY
• Issues in fire load reduction (house keeping,
stock control etc.), control of ignition sources,
maintenance / Inspection of equipment,
process hazards etc
PROTECTION
• Issues in fire protection and special protection
e.g. Pressure safety valves, Equipment
protection, fire alarms, interlocking system etc
Good Risk Management
Toyota Motors
•
•
•
•
•
Associate supplier – Aisin’s auto parts plant
was razed to ground on 01.02.1997, Saturday
Used to supply all but 1% of brake-fluid
proportioning valves (P-valves)
20 Toyota plants were shut down
Each day Toyota is down, Japan’s industrial
output is cut by 0.1% point
Within five days plants were started
Good Risk Management
How had Toyota managed to do that?
•
•
•
•
Mutual aid
Specific responsibilities
Top level commitment
Crises management plan
Bad Risk Management
Bhopal disaster
•
•
•
Leak of Methyl Isocyanate (MIC) from Union
Carbide Bhopal plant
Storage in 3 steel tanks, 171 M3
Three safeguards
- refrigeration
- scrubber
- flare stack
Bad Risk Management
•
•
•
•
Genesis of the disaster lies not in the failure
of the safeguards but in the original design
concept.
Question is, was such a large inventory
essential?
Process of making Sevin (pesticide) without
using MIC or
Adopting a process which used up MIC as
fast as it was made.
“The real objective of Risk Management
is to reduce fear of the unknown and
unexpected events and to create
confidence in future.”
- Felix Kloman
We Know not what tomorrow holds
Nor what the future will entail
Yet we know, those who fail to prepare
Must be prepared to fail !!
Thanks For Your Kind
Attention !!!