Don’t skimp on fire risk management | Insurance Business America
With all the talk about the Fourth Industrial Revolution and the new risks emerging from the cyber sphere, it’s easy to forget that one of the biggest threats to businesses today is something that dates back to the Stone Age: fire.
The risk is a perennial concern that’s on the rise. Fire and explosion incidents are the second biggest source of loss for businesses overall, according to claims analysis from Allianz. This year, business leaders’ fears of the threat grew by 4%.
Often, the disruption of business in the aftermath of a fire can be costlier than the physical damage. The average cost of a business interruption loss from a large fire tops US$2m, leading business interruption to the top of the charts for the sixth year in a row in Allianz’s Risk Barometer 2018.
Now, more than ever, companies with fire exposures are facing increased regulatory risks, heightened levels of public scrutiny, and greater demands in environmental liability management.
“Where could a risk manager step up their game?” asks Jim Marsh, CEO of Global Risk Consultants. “In communication across the entire organisation. The risk manager’s role is not only to identify, mitigate, or transfer risk, it’s also to create that culture of awareness throughout the organisation and to allow those people to make better decisions.”
Also, more and more companies today are looking to cut costs by integrating their supply chains, and that’s heightened their risk exposure. “You used to have multiple facility locations in the supply chain, and now because of cost cuts, that’s been scaled back,” says Marsh. “Now, you have one location that’s super-critical.”
Cost-cutting measures shouldn’t come at the price of fire risk awareness. Often, Marsh says, the first things to be slashed from a company’s budget are key maintenance aspects that can come back to bite them later on. “[Companies will] hit on the level of installations with fire protection,” he says. “By doing that, unfortunately, it allows for bad decisions that may not impact them immediately, but will certainly impact them over time.”
Fire protection engineering can help risk managers increase understanding of their exposure. Property evaluations, forensic engineering, fire and building code analyses, and emergency preparedness evaluations are just a few of the services third party providers like Global Risk Consultants can offer to risk managers keen to keep ahead of the longstanding risk.
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