Effective communication of ideas, views, calculations and assessments is more important today than at any time in the past 20 years. When the hard insurance market conditions, making renewal negotiations more challenging and time intensive, is combined with the myriad of changes to our professional lives brought about by the global pandemic, there is now a real need for innovation in communicating effectively in today’s risk management environment.
For risk engineers, the ability to convey the condition and/or quality of an insured’s assets, their procedures and staff competency is vital to the insurance placement process. This factor is set against a background of an increasingly complex environment that is adding to and augmenting traditional risks pertaining to operating and project assets. The changing business environment, which needs to balance advances in digitalisation, automation and manpower levels, creates unique risk dynamics for each organisation and demands greater analysis than in previous years. Added to this is the challenge that climate change is creating, with the introduction of new technology risks and the elevation of existing construction risks as companies seek to adjust their asset mix as part of their carbon reduction pathway strategies. These are all reasons for greater clarity.
There have been many enhancements in the risk engineering field over the years, covering loss modelling, risk assessment and the execution of risk surveys, to name but a few. Where there has been little by way of innovation is around how these insights are communicated to improve awareness and understanding.
With challenges outlined above and recognising people generally spending more time online on their phones and tablets, the written risk survey report, the main communication tool for over 20 years, needs some help in the 21st century, for all its strengths.
Looking to address this issue directly, risk intermediaries are now creating on-line risk engineering dashboard portals that provides a range of benefits in communicating risk data and insight to all stakeholders. These dashboards are designed to address the principal challenges facing both insureds and insurers today; furthermore, they enhance the value of the risk engineering service provided, making the analysis and conclusions more accessible and easier to understand. These attributes provide significant advantages to users who have limited time to analyse and assess risks.
Even through the pandemic, Risk Engineering teams continue to conduct risk surveys; they continue to be a proven means of effectively assessing operating facilities across the oil, gas, refining, petrochemical and power sectors, in support of insurance placement activities. However, the associated survey reports, which are normally used to conveying insights and conclusions, are typically quite extensive, highly technical and can be time-consuming to digest. Reports are still required for a variety of reasons, including establishing a deep understanding of facility risks for the highly technical readers. However, as mentioned earlier assistance is needed to drive through key learnings more effectively to a wider audience.
The introduction of risk engineering dashboards, alongside survey reports, allows for risk information to be presented in a more concise format, enabling greater assimilation of the risk information, insights and conclusion. This saves time for everyone involved and reports are still available to drill deeper if required when there is more time. There are also additional benefits, namely:
These benefits are crucial for communication improvements but also offer additional value from risk engineering services moving forward.
The ability to visualize risk data in a more fluid and dynamic manner has created the opportunity to realize additional risk insights that were inaccessible from reading through survey reports. We believe this represents a step-change in risk data presentation which offers the following additional benefits:
Realizing these additional insights and conclusions are essential if insureds and insurers are to stay on top of the changing risk landscape. Risk engineering dashboards can assist and are anticipated to play an increasing role in risk management activities going forward.
As has been discussed in this article, enhanced communications between insured and insurers is crucial as we move into a more challenging future business environment.
There is also an equal desire to ensure that the risk communication landscape within operating companies is equally efficient. For example, an area that is a constant challenge for risk engineers, and for the wider insurance sector, is ensuring that risk improvement recommendations have been understood correctly and are being progressed in a timely cost-effective manner.
Having the ability to visualize risk recommendations and associated information in the same way across an organization’s departments and geographical locations allows for greater insight, agreement and timely completion.
Intelligent categorical analysis changes in company risk appetite and systemic issues can be revealed to promote additional risk improvements, leading to more timely and robust risk management decision-making. Anticipated benefits include:
In the power sector there is a continuous drive to improve thermal efficiency through the installation of a range of modifications to either turbine blades, combustion chambers or operations software. The ability to track these modifications over time and trend the changes in power generation and efficiency against corresponding changes in risk quality and climate change benefits is considered highly beneficial.
Allied to the focus on efficiency modifications is the tracking power station adherence to equipment vendor inspection schedules and the availability of strategic spares, such as steam turbine rotors/blades, gas turbine rotors, generator stator/winding and rotors, which will be monitored.
This increased clarity on risk matters across a company can provide significant cost savings and more effective decision-making, both in terms of risk reduction activities and risk transfer strategies. It can also help to dampen the effect of loss events.
The future of a risk dashboard approach to communicate risk insight data derived from risk surveys is only the start of the journey. There are many enhancements anticipated with improvements in visualisation and data analysis, which will be to the benefit of the entire risk community.
Alan McShane is Head of Engineering at Willis Towers Watson Natural Resources GB in London. alan.mcshane@WillisTowersWatson.com
