1. Standing On The Wall An Engineer’s Role in Risk Management and Insurance

2. 2 What is “Standing on the Wall”? You are The Corporation’s Sentry “Son, we live in a world that has walls. And those walls have to be guarded by men with guns. Who’s gonna do it? You? I have a greater responsibility than you can possibly fathom. And my existence, while grotesque and incomprehensible to you, saves lives. You don’t want the truth. Because deep down, in places you don’t talk about at parties, you want me on that wall. You need me on that wall.” Jack Nickelson “A Few Good Men”

3. 3 Engineer’s Role in Risk Management and Insurance Engineering as the Corporation’s Sentry Engineering Factors that Influence Insurance Carriers Integral Role of Engineering In The Insurance Placement Process

4. 4 Engineering As the Corporate Sentry Acquisition Due Diligence –Environmental Surprises –Historical Failure Analysis –Deal “Veto” Power Operational Risk Management –Quality of Construction –Environmental Safegaurds –Loss Lessons Learned

5. 5 Acquisition Due Diligence Environmental Surprises –Are there processes in place to catch data gaps in integrity data? –Where does construction & integrity data stop? –What was cause of historical failures? –Will your processes/protocols change this?

6. 6 Acquisition Due Diligence Deal “Veto” Power ― If you cannot get comfortable with assets, can engineering stop a deal? ―Can engineering’s input effect the construction of the Purchase Sale Agreement?

7. 7 Operational Risk Management Quality of Construction –Are there specific construction related issues that have lead to pipeline failure? Poor pipe quality Climate conditions Corrosion protection failures –Ability to set/control materials & construction specifications –Adaptation of New Construction methods

8. 8 Operational Risk Management Environmental Safeguards –Leak Detection Processes –Additional Leak Prevention/Leak Control Measures in Sensitive Areas –Adaptation of New Detection technologies

9. 9 Operational Risk Management Loss Lessons Learned –Process of Failure Analysis –Process Modifications as Result of Failure –Implementation of Process Modifications

10. 10 Engineering Factors that Influence Insurance Carriers Engineering’s Up-to-Date Technology Knowledge Engineering’s Ability to Control Losses Engineer’s Emphasis on Protecting Environment

11. 11 Engineering Factors that Influence Insurance Carriers Engineering’s Up-to-Date Technology Knowledge –Are control systems latest technology –Are their documented failures with control technology –What training is provided to operators of technology

12. 12 Engineering Factors that Influence Insurance Carriers Engineering’s ability to control losses –Access to Sr. Management –Ability to Control Construction Process –Ability to Control Loss Control Process –Ability to Effect Organizational Change

13. 13 Engineering Factors that Influence Insurance Carriers Engineer’s Emphasis on Protecting Environment –Engineering’s involvement in E H and S statement –Engineering has a proactive versus reactive engineering approach –Engineering is educated on environmental regulations to stay in compliance and out of the “regulatory doghouse”

14. 14 Integral Role of Engineering in the Insurance Placement Process Engineering should be part of every insurance market presentation; Engineering & Risk Management present unified front of loss control being “Priority One”; Engineering can eliminate any market hesitations due to past losses/fast growth; Engineering’s role in claim/incident reporting process

15. 15 Integral Role of Engineering in the Insurance Placement Process Engineering should be part of every insurance market presentation; –Role is to show skill as corporate sentry with: 1 st hand knowledge/expertise of pipeline construction methods, intergrity testing methods and results 1 st hand knowledge/expertise of corporate due diligence standards; 1 st hand knowledge/expertise in incident examination/corrections

16. 16 Integral Role of Engineering in the Insurance Placement Process Engineering & Risk Management present a unified front that loss control is “Priority One” –Role is reinforce Corporate position of safety & loss control: Examples of loss control efforts & effects Engineering’s role in crafting corporate environmental & safety statement; Examples of how cooperation has positively effected claims/incident frequency

17. 17 Integral Role of Engineering in the Insurance Placement Process Engineering is part of claim/incident reporting process; –Role is to show proactive, cooperative effort to address any failure or incident through: 1 st hand knowledge of loss signals; 1 st hand knowledge of response process 1 st hand knowledge of loss control/process modifications to reduce frequency & severity potential

18. Questions?