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.
IRMI Update is sent to subscribers by plain text e-mail twice
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