Composing a Risk Survey Report
Insurers need accurate and independent Risk Survey Reports if they are to underwrite risks effectively. One of the sectors that is particularly complex for risk surveys is large industrial risks.
In order to present a professional Survey Report it is paramount to visit the site and analyse a wide range of information from the Insured and all parties involved. The Survey Report should describe the physical installations, main exposures, hazards, fire and safety systems, operational procedures and provide accurate loss estimations.
One of ADVANTA RISK SURVEYING’s recent assignments involved a major steel mill in Africa. This steel mill had a combination of significant risks including; oil and natural gas facilities, chemical processing plants and over 7,000 staff, in addition to the inherent industry risks associated with furnaces and steel production. However, in this instance there were two aspects at the heart of the site’s operation, namely the integrated power plant and steel production.
The integrated power plant, whilst modest in capacity compared to dedicated power plants, still had a number of high pressure steam boilers, steam distribution systems, steam turbine and electrical generator sets, high voltage transformers and intricate electrical distribution systems. The steam turbines had various steam extraction levels supplying the process which made the control of such machines very elaborate.
Steel production is a complex and hazardous business. Electric Arc Furnaces need to be constructed, operated and maintained to the highest standards if damaging incidents are to be avoided. Upon review we established that the site had up to date operating instructions, well trained staff, modern controls, instrumentation and electrostatic discharge systems, which are all integral parts of ensuring safe operation.
We identified that the site also had an array of explosion and fire risks including; significant stores of fuel and chemicals, high pressure hydrocarbon gas systems and high-pressure steam systems as well as explosive atmospheres in certain parts of production. Whilst hazard and operability studies (HAZOP) are more commonly undertaken in the oil and gas industry, the staff on site demonstrated to us that they had a current and complete HAZOP study for the main operating areas.
Fire and Safety Systems and the relevant regulations covering steel mills are varied, reflecting the wide scope of risks involved. This specific site had to manage numerous safety requirements as a result of the changing hazards. We established that the site had a comprehensive training program for its staff to enable them to operate safely in sections of the site with quite distinct challenges.
Whilst it was possible to evaluate the above areas of risks in partial isolation to some extent, the site operated as an integrated steel mill and had to be assessed in its entirety. One of the most challenging aspects of this case was understanding the production process in sufficient detail to allow a meaningful business interruption calculation to be undertaken. The steel plant had multiple product lines and production contingency measures, therefore assessing the “what if” question was complex. It was very useful to have an in-house forensic accounting team who could offer their expertise in handling such multifaceted processes.
It is critical that a Survey Report not only offer a snapshot of the site at a given moment in time, but also presents a complete picture of the relevant risks affecting the site. At ADVANTA RISK SURVEYING we ensure that our surveyors understand the specific industry risks, provide an assessment of the ongoing risk profile and evaluate how well the site compares with similar sites.
A key consideration which directly influences the level of risk is the type of safety/operational culture at the site and an assessment of this can only be made by experienced surveyors during an onsite visit. Finally, we ensure that all our Survey Reports specify improvements that can be implemented to reduce the risk and impact of such losses over the policy period, to assist Insurers with their assessments.
Jeff Ashman can be contacted at firstname.lastname@example.org