IRMI Update—Issue #110
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
April 5, 2005
In This Issue
Colleague,
On the good news front, a recent survey by Deloitte and Touche revealed that
the number of businesses with corporate-wide continuity and disaster recovery
plans has increased substantially over the past 5 years. When Deloitte first
conducted this survey, only 30 percent of the participants had such plans. Today,
50 percent have business continuity management (BCM) plans. Approximately 200
management representatives from a wide range of industries—such as media/entertainment,
financial services/banking, transportation, and government—responded to the
latest survey.
While there has been a substantial increase, it is still worrisome that so
many companies do not have disaster recovery plans. The reasons cited by Deloitte's
respondents include the following:
- Most organizations lack a senior-level business continuity management
champion that can influence both the company's culture and financial resources.
- Business units are reluctant to spend the time and money to implement
"optional" programs.
- Creating an enterprise-wide BCM program can seem overwhelming to many
organizations that are already resource constrained.
- Corporate executives may operate under the belief that "it will never
happen to our organization."
A BCM plan may very well be the single most important step a large or small
company can take to assure it recovers from a major natural or manmade disaster.
Even a very basic and simple plan can help considerably. Please consider making
the development of disaster recovery plans a major objective for your firm or
your clients this year. (If you subscribe to The
Risk Report, be sure to see the
March issue, which addressed this topic.)
What have you found to be the best ways to overcome the barriers to developing
disaster recovery plans listed above? Can you offer any practical advice on
disaster planning for our readers? What role should agents and brokers play
in encouraging their clients to do this? [See reader
comments].
Thank you for subscribing to IRMI Update. I hope to see you at one of our
upcoming captive insurance seminars.
All the best,
Jack
Jack P. Gibson, CPCU, ARM
President
IRMI
Hot Work Permit System or Bring the Marshmallows?—Although
we all enjoy roasting marshmallows on an open fire, the choice should be clear—especially
if the open fire is inside your facility. I'd recommend the Hot Work Permit
System—it's not as tasty, but it satisfies.
During a recent 2004 survey, an insurer's loss control representative observed
cutting and welding being conducted inside a midsized, 50-employee woodworking
plant, where the abundant, red hot, and glowing sparks were flying in all directions—including
impact on top of a wood pile some 15 feet away from the welding/cutting site.
There were no barriers between the hot work and the wood. Not a single fire
extinguisher, fire hose, or watchman was in sight—just the insurer's loss control
rep and the business owner—and the red-hot sparks falling onto wood.
"That's just temporary," said the owner in a feeble attempt to excuse the
hazard. Fires and other types of losses are also just temporary events that
do not normally occur. It's not just the duration of a hazard that presents
a risk, it's the combination of the frequency and severity of losses that could
result from the hazard being present at any time that is paramount.
A formalized Hot Work Permit System, in compliance with NFPA 51B, Standard
for Fire Prevention during Welding, Cutting and Other Hot Work or the corresponding
FM Engineering Hot Work Permit System should be implemented at all locations
wherever any hot work may be done at any time, even temporarily. Many insurers
have "kits" that they supply to insureds and offer instructions, making it easy
to implement this professional loss prevention measure.
Many CEOs, CFOs, CROs, or risk managers would find it difficult to attest
to the actual activity levels for hot work at all of their locations 24/7. It's
expected that executives and risk managers would exercise due diligence and
implement a proper loss prevention measure such as a Hot Work Permit System
and hold each site manager accountable. While this is the best method of control,
losses from hot work could still occur.
Take all reasonable and prudent steps to prevent such unnecessary losses—otherwise
keep a supply of marshmallows on hand.
By: Owen Kurin, P.Eng., MBA, FCIP, CRM
Loss Control Manager, The Citadel Assurance
A Winterthur/Credit Suisse company
Toronto, Ontario
Suggest a Risk Tip.
Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages.
Submit your tips. We'll
acknowledge your contribution as we did for Owen.
There are now 647 risk management and insurance articles on IRMI.com. Below
you'll find summaries of some recent additions with links to the articles.
We have recently updated IRMI Online to include the latest issues of our
newsletters, The Risk Report,
Captive Insurance Company Reports, and
Strategic RM, as well as supplements to
a number of the reference manuals. See a
summary of all the new stuff with direct links into the publications.
Business Auto Policy
Covered Auto Designation Symbols—Three states have expanded uninsured
motorist/underinsured motorist (UM/UIM) coverage to hired and nonowned autos.
Maureen McLendon explains the effect on the covered auto designations.
IRMI has launched a new insurance continuing education program for agents,
brokers, underwriters, and construction-industry professionals. The Construction
Risk and Insurance Specialist (CRIS) continuing education program is a specialized
curriculum consisting of five courses presented entirely online. Those who complete
the program may display the CRIS designation to certify their construction insurance
expertise and earn state insurance continuing education (CE) credit in the process.
The CRIS program is quite affordable, and insurance CE credit is also available
in many states. The self-paced courses and exams may be taken from any computer
with Internet access.
Learn more.
IRMI is presenting another round of seminars on captive insurance with Kate
Westover. She will provide practical advice on how to determine if a captive
is right for your company or your clients. You'll leave knowing when and why
captives are used, the key differences between the various alternative captive
approaches, and how they compare to other alternative risk transfer (ART) programs.
Learn how to conduct a captive feasibility study and the key elements for formulating
a captive business plan. This short but intensive educational program will help
you avoid costly mistakes in choosing between ART alternatives and setting up
the program. Registration is limited per location:
- April 27-28, 2005, in Las Vegas
- May 11-12, 2005, in Dallas
- May 18-19, 2005, in Orlando
To find out more, see the seminars
section.
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