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Business abroad: how to reduce risks in 5 points.

Published:23 January 2017
Reading time: 3 minutes
Grandi serbatoi bianchi per il carburante, dietro una recinzione di catene e alberi autunnali senza foglie, attendono l'ispezione tecnica in azienda, mentre foglie sparse riposano sotto un cielo limpido.

Do we want to sleep soundly? Opening the gates of our firm to experienced consultants is an excellent strategy: what ever it happens, insurers and risk managers never leave us alone.

A case really happened.

In 2010 in Australia an industrial bakery was entirely destroyed by a huge fire. The insurance company refused to pay multi-million $ compensation: why?

The walls’ premises had been constructed using a large quantity of highly flammable expanded polystyrene.

Before the conclusion of the insurance, during the price negotiation of the insurance contract, the insurer was not made aware of the presence of polyurethane foam. Therefore, the payment of damages had been denied.

The reason why firms prefer to open their doors to professionals is to let insurers and risk managers understand their risk from live. Paragraph.

As soon as the risk exposure has been explored and identified, in case of loss the settlement and payment of the claim is faster. And business goes on.

How to reduce the companies’ risk in 5 steps.

1. Review the areas outside the company.

The correct distance between the production site and the warehouses of our neighboring company should be communicated to the risk managers and to the insurance companies; respecting the local law on a regular installation and revision of hydrants and tanks helps to reduce fire risk.

2. Double Check of the building materials.

The presence of highly flammable material, if not puntually communicated to the insurance company, may preclude our firm to collect payment of a major accident. If we buy a factory, if we enlarge our production site, it is suggested to arrange a visit with our trusted risk managers together with the technical dept. of our insurer.

3. Warehouse and electrical systems.

Only in the USA fires in industrial properties areas have been calculated (legal fees for work accidents excluded!) $1 billion in direct damage. An updated survey, supported by photographic material is very warmly suggested.

4. Dangerous under-insurance.

Reviewing the sums insured of buildings, machinery, warehouses, finished product, is a good habit. Arranging a meeting together with our risk manager and the insurer is important to avoid unpleasant disputes in case of costly claims settling.

5. Production shutdown. Damages from business interruption should be calculated before and not after!

Not only large organizations face business interruption risks.

The graph shows that SMEs continue to pay the highest price: the prolonged shutdown of the production chain may be lethal for the survival of a medium-sized firm. The update of the sum assured should be provided routinely, involving both risk manager both an independent appraisal estimator: in case of sudden shutdown, we can rely on the insurance coverage and resume businesses quickly.

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Category:Business insurance
Tags:business interruption,  manufacturing risk exposures

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