Risk Assessment – It’s necessity Risk Assessment – It’s necessity 7 th 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 If Identified and Evaluated at the earliest can prevent or diminish quantum of a future damage / loss. 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.

Fire & Explosion!!!! Recent one??? Any guesses China Automobile part manufacturing unit explosion/ fire

Fire

Milford Haven August 1983 Loss: $30 Mn Boil-over

UVCE Sarawak December 1997 PD 282 M$ US Vapour cloud explosion

UVCE Norco, Louisiana May FCC Unit PD 314 M$ US Vapour cloud explosion

BLEVE Feyzin, France Jan LPG Sphere Tanks Operation Explosion (BLEVE)

BLEVE Mexico City Nov LPG Tanks died Explosion (BLEVE)

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. Explosion

Fire Office building fire

Fire French bank building May, 1996

Oil Rig sank in Brazil 15 th 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. Marine

Risk Assessment There is a lot we can do to control these sources…

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 policies to ensure safety and loss prevention.. MANAGEMENT Issues in layout for factory facilities, Construction Aspect, fire-resistance of buildings, fire separations etc. CONSTRUCTION Issues in fire load reduction (house keeping, stock control etc.), control of ignition sources, maintenance / Inspection of equipment, process hazards etc OCCUPANCY Issues in fire protection and special protection e.g. Pressure safety valves, Equipment protection, fire alarms, interlocking system etc PROTECTION

Toyota Motors Associate supplier – Aisin’s auto parts plant was razed to ground on , 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 Good 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. Bad Risk Management

“ 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 !!!