CONFERENCEPRESENTS

Property Loss ControlProperty Loss ControlCritical to Maintain Efficient OperationsCritical to Maintain Efficient Operations

ORORAdditional Work for Unforeseen GainAdditional Work for Unforeseen Gain

Brian Proctor, Risk Manager, Capital Power CorporationBrian Proctor, Risk Manager, Capital Power Corporation

David Thompson, Operations Vice President, FM GlobalDavid Thompson, Operations Vice President, FM Global

Setting the Stage: Business BasicsSetting the Stage: Business Basics

BusinessRaw products

Outside Services

FinishedProducts / Services

Setting the Stage: Business BasicsSetting the Stage: Business Basics

CostsBuildings

EquipmentPeople

SuppliersSales /

Customers

$ $

Value

$

Risk Management :Risk Management :Protecting the Value of your BusinessProtecting the Value of your Business

BUSINESSPeople

BuildingsEquipment

Are all elements of the business equally Important to a well functioning Business?

Risk Management :Risk Management :Protecting the Value of your BusinessProtecting the Value of your Business

People

BuildingsEquipment

Looking at the Loss Prevention ComponentsLooking at the Loss Prevention Components

People EquipmentBuildings

Safety Programs

Emergency response

Training

Audits

Succession Planning

Efficiency Studies

Maintenance Programs

Emergency response

Training

Inspections

Capital requirements

Maintenance Programs

Contingency planning

Operator Training

Inspections

Life studies

Performance monitoring

When Times are tough where do we cut? What risks do we assume when we sacrifice programs and procedures?

What is a Highly Protected Risk?What is a Highly Protected Risk?

A A highly protected riskhighly protected risk (HPR) is a (HPR) is a location at which all reasonable physical location at which all reasonable physical and human element loss prevention and human element loss prevention measures have been implemented to measures have been implemented to protect buildings, equipment and contents protect buildings, equipment and contents from all losses including those caused by from all losses including those caused by natural hazards and change is being natural hazards and change is being managed proactively to maintain this managed proactively to maintain this status.status.

Where is your Business Today?Where is your Business Today?

Level I

Level II

Level III

Purchase InsuranceNo Formal Loss prevention programsInspection services report on conditionsGenerally Non -HPR

Corporate Risk Management Strategy -Formal Loss Prevention Programs

-Corporate evaluations to ensure compliance- External evaluators (FM or Broker)- Generally account is HPR

Company Wide Risk Management Strategy -Change management policy

-Site level self audits of Loss Prevention Programs- Loss prevention Inspectors consult rather than evaluate- Superior HPR

Highly Protected Risk (HPR) Management Levels

What are the benefits of an HPR risk?What are the benefits of an HPR risk?

Operational Cash Flow Operational Cash Flow

PlusPlus

Growth OpportunitiesGrowth Opportunities

Offset byOffset by

Financial RiskFinancial Risk

SuppliersSales /

Customers

$ $

Value

$

What is Value?What is Value?

Business

Managing Financial RiskManaging Financial RiskThe Risk Quality Tie-inThe Risk Quality Tie-in

0

200

400

600

800

1000

1200

Loss Dollars inMillion USD

Q1 Q2 Q3 Q4

Risk Mark Quartile

Loss Dollars VS Quality

Managing Financial RiskManaging Financial RiskThe Risk Quality Tie-inThe Risk Quality Tie-in

0

2

4

6

8

10

12

14

16

18

Percentage

Q1 Q2 Q3 Q4

Risk Mark Quartile

Cash Flow Volitility

Managing Buildings?Managing Buildings?

New Construction managedNew Construction managedContractor ManagementContractor ManagementMaintenance of Fire Protection EquipmentMaintenance of Fire Protection Equipment Inspect Fire Protection EquipmentInspect Fire Protection EquipmentManage ImpairmentsManage ImpairmentsHousekeeping Housekeeping Emergency responseEmergency responseTRAINING & EDUCATIONTRAINING & EDUCATION

Managing Equipment?Managing Equipment?

Understand your ProcessesUnderstand your ProcessesUnderstand your Critical ObjectsUnderstand your Critical ObjectsUnderstand InterdependenciesUnderstand InterdependenciesPreventative MaintenancePreventative MaintenanceOperator TrainingOperator TrainingContingency PlanningContingency PlanningLife StudiesLife Studies

How do you figure out where you stand?How do you figure out where you stand?

Assessment of current conditionsAssessment of current conditions In House evaluations?In House evaluations? Outside evaluations?Outside evaluations?

Scope of AssessmentScope of Assessment Fire?Fire? Natural Catastrophe?Natural Catastrophe? Equipment Hazards?Equipment Hazards?

Breadth of assessmentBreadth of assessment All Facilities and processesAll Facilities and processes Strategic facilities and processesStrategic facilities and processes Inside onlyInside only Supply Chain exposuresSupply Chain exposures

So you’ve done all that ….So you’ve done all that ….You know where you stand….You know where you stand….You are on the path to HPRYou are on the path to HPR

The Tough QuestionThe Tough QuestionWhere does this path End?Where does this path End?

Are you there?Are you there?

If you are Congratulations…If you are Congratulations…

If you are not you have a journey to makeIf you are not you have a journey to make

Because…Because…

Assessment without Action is BureaucracyAssessment without Action is Bureaucracy

What is HPR for you?What is HPR for you?

What is your risk tolerance?What is your risk tolerance?What are the business consequences of a What are the business consequences of a

loss?loss?These questions should help define your These questions should help define your

focus and actions.focus and actions.

Not all Risks are Created Equally

So you now knowSo you now know

1) where you are1) where you are2) where you want to Go2) where you want to Go

You need a vehicle….You need a vehicle….

How do you get there?How do you get there?

Getting Corporate Support forGetting Corporate Support forProperty Risk managementProperty Risk management

StakeholdersStakeholders

Corporate ManagementCorporate ManagementSite ManagementSite ManagementEmployeesEmployeesRisk ManagementRisk Management

Corporate ManagementCorporate Management

OpportunitiesOpportunities Understand decision making Understand decision making

(Use the right Language for your Culture)(Use the right Language for your Culture)ReliabilityReliabilityProfitabilityProfitabilityShare ValueShare ValueSafetySafety

Share industry news that supports your initiativesShare industry news that supports your initiativesBe InnovativeBe Innovative

Corporate ManagementCorporate Management

ChallengesChallengesConvincing Management that Loss Control adds Convincing Management that Loss Control adds

ValueValueDeal whenever possible with proven solutionsDeal whenever possible with proven solutionsPre-planning of new constructionPre-planning of new construction

Site ManagementSite Management

OpportunitiesOpportunities Understand Local decision making processUnderstand Local decision making process Plan and communicate inspection protocolsPlan and communicate inspection protocols

Make sure they understand expectationsMake sure they understand expectations

Before, During and After inspectionsBefore, During and After inspections Have exit interviews so no one is surprised when report issuedHave exit interviews so no one is surprised when report issued Attend and facilitate inspections whenever possibleAttend and facilitate inspections whenever possible Prioritize issues Prioritize issues

Be a Resource for the SiteBe a Resource for the Site

You ARE Corporate and You ARE there to helpYou ARE Corporate and You ARE there to help

Site ManagementSite Management

ChallengesChallengesConvince Management that Loss Control adds Convince Management that Loss Control adds

ValueValueRecognize they are busy people and have other Recognize they are busy people and have other

competing priorities – safety, environment, internal competing priorities – safety, environment, internal auditaudit

EmployeesEmployees

OpportunitiesOpportunitiesEducation and Communication are keyEducation and Communication are key

They need to Understand the HazardsThey need to Understand the HazardsThey need to Understand their RoleThey need to Understand their RoleThey need to be supported and supportThey need to be supported and supportiveiveThey need to know their efforts are appreciatedThey need to know their efforts are appreciated

EmployeesEmployees

ChallengesChallengesApathy can destroy the best laid corporate plansApathy can destroy the best laid corporate plansMomentum is difficult to create and harder to Momentum is difficult to create and harder to

maintainmaintainSuccess takes both management and employee Success takes both management and employee

buy-in and commitment.buy-in and commitment.

Risk ManagementRisk Management

OpportunitiesOpportunities Know what your Objectives areKnow what your Objectives are Be realistic with your ObjectivesBe realistic with your Objectives Learn from the past – Do your homework!Learn from the past – Do your homework! Know your Peer Group outside your companyKnow your Peer Group outside your company

Loss Control – A Risk Manager’s PerspectiveLoss Control – A Risk Manager’s Perspective

Establish Your CredibilityEstablish Your Credibility

Learn your business and the languageLearn your business and the language

Get to know the plants, equipment types and technologyGet to know the plants, equipment types and technology

Work closely with the plant managers throughout the yearWork closely with the plant managers throughout the year

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

Pre Site VisitsPre Site Visits

Ensure lots of advance notice, schedule of attendee’s, Ensure lots of advance notice, schedule of attendee’s, duration of visit and agenda sent ahead of timeduration of visit and agenda sent ahead of time

Try for consistency with loss control representatives from Try for consistency with loss control representatives from broker and insurers – results are fewer repetitive questions broker and insurers – results are fewer repetitive questions and picturesand pictures

Ensure the loss control representatives are trained in your Ensure the loss control representatives are trained in your business.business.

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

Site VisitsSite Visits

Make sure arrival of personnel is coordinated, on time and Make sure arrival of personnel is coordinated, on time and any security issues have been taken care of before you any security issues have been taken care of before you arrivearrive

Document ‘action’ items by all parties and ensure follow Document ‘action’ items by all parties and ensure follow up with an email upon return to office – no gaps.up with an email upon return to office – no gaps.

Ensure exit meetings are conducted with the appropriate Ensure exit meetings are conducted with the appropriate personnel in the roompersonnel in the room

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

Report Review and DistributionReport Review and Distribution

Review reports and compare to exit meeting notes to Review reports and compare to exit meeting notes to ensure accuracy of recommendations along with ensure accuracy of recommendations along with designated course of action designated course of action

Reports to plant manager, corporate management and Reports to plant manager, corporate management and your broker’s loss control engineer along with priority your broker’s loss control engineer along with priority rankings and comments – include any additional materialrankings and comments – include any additional material

Don’t lose the momentum of the visitDon’t lose the momentum of the visit – the longer you – the longer you wait to distribute the reports, the less chance in wait to distribute the reports, the less chance in succeeding with implementation of the recommendationsucceeding with implementation of the recommendation

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

Follow upsFollow ups

Ensure periodic follow ups are made with plant Ensure periodic follow ups are made with plant management. Works as a good reminder management. Works as a good reminder

Focus on the recommendations that all involved believe Focus on the recommendations that all involved believe in. Support plant management in the budget processin. Support plant management in the budget process

Let’s admit - Some recommendations are not feasible Let’s admit - Some recommendations are not feasible and are not cost effective (need to be able to and are not cost effective (need to be able to demonstrate a return for the monies spent). Work demonstrate a return for the monies spent). Work together for a reasonable alternativetogether for a reasonable alternative

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

Selling to Senior ManagementSelling to Senior Management

Understand the concepts that drive decision making Understand the concepts that drive decision making within your organization within your organization

Understand the budgeting and budgeting approval Understand the budgeting and budgeting approval processprocess

Must be able to convince Senior Management that loss Must be able to convince Senior Management that loss control adds value to the organizationcontrol adds value to the organization

Incorporate the human safety element in the conversation Incorporate the human safety element in the conversation – people are generally perceived as more important than – people are generally perceived as more important than propertyproperty

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

Selling to Senior Management (con’t)Selling to Senior Management (con’t)

Be innovative – implement scorecard systemsBe innovative – implement scorecard systems

Be willing to present at plant manager meetingsBe willing to present at plant manager meetings

Become involved on advisory committeesBecome involved on advisory committees

Share industry loss information with managementShare industry loss information with management

Find a Champion and work with them – help them in Find a Champion and work with them – help them in selling concepts (such as strategic spares)selling concepts (such as strategic spares)

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

ConstructionConstruction

Loss control really starts here! Establish standards in the Loss control really starts here! Establish standards in the bid documents. Easier to implement FM standards at this bid documents. Easier to implement FM standards at this stagestage

Risk improvements more cost effective at this stage than Risk improvements more cost effective at this stage than trying to retro-fit an operating facility trying to retro-fit an operating facility

Project management goals will always be different than Project management goals will always be different than operational management. Know which battles you want operational management. Know which battles you want to win going into the project. Communication and $$’s will to win going into the project. Communication and $$’s will be key.be key.

A Risk Manager’s PerspectiveA Risk Manager’s Perspective

Roadblocks in our BusinessRoadblocks in our Business

Focus has been moved from reliability to profitability.Focus has been moved from reliability to profitability.

Examples include extending maintenance outages, Examples include extending maintenance outages, pushing machinery and equipment to their limits pushing machinery and equipment to their limits

Any cost benefit analysis on loss control initiatives must Any cost benefit analysis on loss control initiatives must demonstrate that the expenditure will have a positive demonstrate that the expenditure will have a positive impact on the bottom lineimpact on the bottom line

Property Loss ControlProperty Loss Control

QUESTIONSQUESTIONS

David ThompsonDavid Thompson

Vice President, OperationsVice President, Operations

FM GlobalFM Global

Email; Email; david.m.thompson@fmglobal.com

Brian ProctorBrian Proctor

Manager, Insurance Risk ManagementManager, Insurance Risk Management

Capital Power CorporationCapital Power Corporation

Email; Email; bproctor@capitalpower.com

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