Industrial Special Risks

The concept of risk

-an unwanted event that may or may not occur.

-the cause of an unwanted event which may or may not occur.

– the probability of an unwanted event which may or may not occur.

-the statistical expectation value of unwanted events which may or may not occur.

-the fact that a decision is made under conditions of known probabilities (“decision under risk”)

What Is Risk?

-An expectation of loss

-Always an element of uncertainty

-Always refers to future

-Usually covers both severity and possibility of a loss

-Usually refers to unwanted consequences

Risk Definition

-An expression of the probability and the consequences of an accidental event.

Consequence (result, effect or outcome) Categories

The consequences of an accident may be classified in different categories, as- Personnel consequences, Environmental damage, Economic loss, Damage to material assets, Production/service loss, Information “loss”, Image (i.e., damage to reputation)

Perception of Risk:

Perception is an important factor to be taken into account when communicating risks. Studies by anthropologists and sociologists have shown that risk perception and the acceptance of a risk have their roots in cultural and social factors. It has been argued that the response to a hazard is among the social influences transmitted by friends, family, colleagues, and respected public officials.

In many cases, however, the perception of risk can be formed through a process of reasoning on the part of the individual himself/herself. It is important to transmit information about the magnitude of the risk so that people may become aware of risks that they had never heard of before; while information about personal vulnerability is important for the transition from awareness to the decision to act.

The decision to act is not, however, the same thing as acting. Since most people are concerned about the same things that concern their friends, they are alert and responsive when presented with evidence that a particular hazard may (or may not) represent a local concern.

Individuals who feel safe and those whose attitudes reflect some degree of knowledge about the risk in question experience fewer obstacles to modify their environment than those who respond defensively. This aspect will have repercussions when planning activities for a risk communication program.

Defining traits of perception

Researchers on risk perception have studied the characteristics of risk that influence perception. The conditions defined below have the greatest influence on the way risks are perceived.

1) Dread

Which idea frightens you more, being eaten by a shark or dying of heart disease? Both can kill, but heart problems are much more likely to do so. In spite of this, the most feared deaths are the ones that worry us the most. Cancer, for example, causes more dread because it is perceived as a terrible way to die. This explains why hazards that can cause cancer, such as radiation and chemical agents, arouse intense fears. Fear is a clear example of what we think about a risk in terms of our intuitive feelings, a process which is called the heuristic effect.

2) Control

Most people feel safe when they drive. Having the steering wheel in their hands produces a feeling of power, a sense of being in control. If we change places and ride in the passenger seat, we feel nervous because we are no longer in control. When people feel that they have some control over the process that determines the risk facing them, that risk will probably not appear so great as in the case when they have no control over it.

3) Is it a natural risk or a man-made one?

Nuclear energy sources, as well as mobile telephones or electric and magnetic fields, are often a greater cause of concern than the radiation produced by the sun. However, it is a well-known fact that the sun is responsible for a large number of skin cancers each year. The natural origin of a risk makes people perceive it as a lesser risk than a man-made one. This factor helps to explain the widespread public concern about many technologies and products.

4) Choice

A risk that we choose to take seems less hazardous than one imposed upon us by another person. If you use a mobile telephone while driving, you may perceive it as hazardous that another driver uses one and you will be angry because of the risk the other driver imposes on you, even though you are taking the same risk yourself. You are less concerned about the risk you yourself are taking: your control over your car influences your risk perception.

5) Effects on children

The survival of the species depends on the survival of its offspring. This explains why the risks run by children, such as exposure to asbestos at school or the kidnapping of a young person; appear to be more serious than the same risks in adults (exposure to asbestos in the workplace or the kidnapping of an adult).

6) New risks

New risks, including the severe acute respiratory syndrome (SARS), Nile virus, and new technologies and products, tend to be more alarming than those risks that we have lived with for some time and which our experience has helped us to put into perspective.

7) Awareness

The more aware we are of a risk, the better we perceive it and the more concerned we are. For example SARS was given wider coverage, received more attention, and caused greater concern than influenza, which is responsible for a large number of deaths each year. Awareness of certain risks can be high or low, depending on the attention given to them.

8) Possibility of personal impact

Any risk can seem greater to us if we ourselves or someone close to us are the victims. This explains why the statistical probability is often irrelevant and ineffective for communicating risks. The closer we are to the risk, and the clearer our knowledge of its consequences, the greater will be our perception of it.

9) Cost-benefit ratio

Some risk perception analysts and researchers believe that the cost-benefit ratio is the principal factor that determines how much we fear a given threat. If there is a perceived benefit in a specific behavior or choice, the risk associated with that behavior or choice will seem smaller than when no such benefit is perceived.

10) Trust

The more confidence we have in the professionals responsible for our protection or in government officials or institutions responsible for our exposure to risk (for example, environmental officials or industrial managers) or in the people who transmit risk information to us, the less fear we will feel. The less we trust them, the greater will be our level of concern.

11) Memory of risks

A memorable accident makes a risk easier to evoke and imagine, and therefore it can seem greater (for example, many people remember the methyl isocyanate gas leak in Bhopal, India, that affected thousands of persons). The experiences that people have had are an important element in their risk perception. A person’s experience will determine whether he or she attaches greater importance to one particular risk than to other statistically significant ones.

12) Spread over space and time

Unusual events such as nuclear accidents are perceived as riskier than commonplace risks (collisions on the highway).

13) Effects on personal safety and personal properties

An event is perceived as risky when it affects basic interests and values; for example, health, housing, the value of property, and the future.

14) Fairness

People who have to face greater risks than others and who do not have access to benefits normally become indignant. The community believes that there should be a fair distribution of benefits and of risks.

15) Process

The agency or government must demonstrate trustworthiness, honesty and concern about impacts on the community. In addition, it needs to communicate with the population before making decisions, and establish a relationship of mutual respect. It should also listen to the people, and respond to any doubts or questioning on their part. When these conditions are not met, the perception of the risk in question is negatively affected.

Risk Factors

What is a risk factor?

A risk factor is something that increases your chances of getting a harm or accident or disaster. Sometimes, this risk comes from something you do. For example, smoking increases your chances of developing colon cancer. Therefore, smoking is a risk factor for colon cancer.

Other times, there’s nothing you can do about the risk. It just exists. For example, people 50 and older are more likely to develop colon cancer than people under 50. So, age is a risk factor for colon cancer.

1. Possible Risk Factors for diseases:

What are the identified cardiovascular risk factors?

According to guidelines from scientific societies (such as the European Society of Cardiology), there are factors that can be modified and others that cannot:

Non-modifiable risk factors

• Age: the older you get, the greater your risk
• Family history: your risk is higher if your parents, grandparents, or brothers and sisters suffered a cardiovascular event at a relatively young age (under 55 for men and under 65 for women).
• Medical background
• Gender
• Ethnic background

Modifiable risk factors

You can reduce three of these risk factors yourself:

• Smoking: smoking considerably increases your risk (not only of a cardiovascular event, but also of lung cancer, cancer of the mouth or larynx, cervical cancer, and bladder cancer).
• Increased cholesterol: a high level of cholesterol in the blood clearly increases the risk of a future cardiovascular event.
• A sedentary lifestyle: people who do not regularly practice a physical activity such as taking a brisk walk at least once a week, have a shorter life expectancy than those who are physically active.

2. Possible Risk Factors for floods:

(A)  Monsoon downpour: An increased amount of precipitation then normal monsoon downpour in the Ganges-Brahmaputra-Meghna drainage. The heavy precipitation is actually an effect of other processes such as the greenhouse effect or destruction of forests in the upstream region.

(B)  Synchronization of Flood Peaks:  The synchronization of flood peaks for the major three rivers took place within a two week time period, causing a sudden increase in water level in virtually all areas of the country. Reduce the water carrying capacity of the drainage system and decrease land height with respect to the base level of the rivers in Bangladesh.

(c)  Local Relative Sea Level Rise:  At the present time sea level is rising globally (Pilkey et al., 1989).  If sea level rises in an area at a rate faster than the rate of land aggradations due to sedimentation, then land height decreases.  Any decrease in land elevation can cause increased inundation by rivers overflowing at bank full stage.  The rate of local relative sea level rise is 7 mm/year around the coastal areas of Bangladesh (Emery and Aubrey, 1990). 

(d)  Inadequate Sediment Accumulation:  The only way for land to counter the effects of a rising sea is for sediment to accumulate at a rate that is sufficient to keep pace with the rate of sea level rise.  Limited data show that the average sediment accumulation rate for the last few hundred years in the coastal areas of Bangladesh is 5-6 mm/year, which is not enough swiftness with the rising sea level (Khalequzzaman, 1989).  As a result, net land elevations must have been decreasing over time, resulting in more flood inundations.

(E) Deforestation in the Upstream Region: A rapid increase in population in the Indian Subcontinent over the course of the present century has resulted in an acceleration of deforestation in the hills of Nepal to meet the increasing demand for food and fuel wood  (Bajracharya, 1983; Ives, 1989; Sharma, 1991).Deforestation of steep slopes is assumed to lead to accelerated soil erosion and landslides during monsoon precipitations.  This in turn is believed to contribute to devastating floods in the downstream regions such as in Bangladesh

(F)  Damming of Rivers:  Damming of a river reduces the velocity of water flow downstream from the dam.  As a result of reduced velocity, the sediments carried by the river start to settle down faster on the riverbed, causing riverbed aggradation and in turn reducing the water carrying capacity of the river (Shalash, 1982).  The Farakka Barrage on the Ganges has already caused tremendous damage to the agriculture, navigation, environment, and hydrodynamic equilibrium in Bangladesh (Shahjahan, 1983; Siddiqui, 1983; Broadus et al., 1986; Khalequzzaman, 1989).

(G)  Soil Erosion due to Tilling:  Ploughing makes the land surface more susceptible to soil erosion.  Surface run-off can easily wash away the topsoil from cultivated land.  This surface erosion reduces land height, which in turn increases flood intensity in an area.  The land elevations in Bangladesh must have been reduced over time due cultivation

(H)  Excessive Development:  Rapid population growth creates extra pressure on the land of already overcrowded Bangladesh.  Agricultural lands give way to housing developments and roads.  This rapid development and urbanization must have aggravated the flooding problem in Bangladesh.

(I)  Greenhouse Effect: The world is about to enter a period of rapid warming.  Should the greenhouse effect become a reality, the low lying coastal areas will be affected by a rising sea level of even greater magnitude. Bangladesh will be severely impacted by such an increase in sea. Besides many other adverse environmental, economic, and climatic consequences, the base level of all rivers will change following any change in the sea level.  The effect on the flooding of a higher base level resulting from a rising sea level has already been discussed earlier in this section.  The greenhouse effect will also increase the amount of rainfall and storminess, which will further aggravate the flood problem.

3.  Possible Risk Factors for Soil erosion: Three factors: Slope, K factor, and Land Cover Type.  We then divided these factors into low, medium, and high credibility and assigned point values as follows:

Slope – erodibility increases with steepness.

Gradient	Point Value
0 – 10%	1
11 – 25%	2
> 25%	3

Soil K factor – The erodibility of a soil based on its texture.  Coarse textured, or sandy soils have lower k factors because they are permeable and thus produce less runoff.  Fine textured soils like clays and silts  have higher k factors because they produce more runoff.

K Factor	Point Value
0 – 0.2	1
0.21 – 0.4	2
> 0.4	3

Land Cover – Because we are looking at erodibility  as a result of logging, those cover types not likely to be logged will be excluded.

Cover Type	Point Value
Other	0
Hardwoods	1

4. Possible Risk Factors for Cyclones:

Water temperatures of at least 26.5 °C (79.7 °F) are needed down to a depth of at least 50 m (160 ft); waters of this temperature cause the overlying atmosphere to be unstable enough to sustain convection (upward motion of warmer air) and thunderstorms.

Another factor is rapid cooling with height, which allows the release of the heat of condensation that powers a tropical cyclone.

High humidity is needed, especially in the lower-to-mid troposphere; when there is a great deal of moisture in the atmosphere, conditions are more favorable for disturbances to develop. Low amounts of wind shear are needed, as high shear is disruptive to the storm’s circulation.

Storm/ tidal surges: high winds pushing on the ocean‘s surface and low pressure.

Risk Analysis:

Risk is the probability of harmful consequences or

•expected losses (deaths, injuries, property, livelihoods, economic activity disrupted or environment damaged)

•resulting from interactions between natural or human-induced hazards and vulnerable conditions.

Risk = (Hazards X Vulnerability)/Capacity

Risk analysis: A methodology to determine the nature and extent of risk by analyzing potential hazards and evaluating existing conditions of vulnerability that could pose a potential threat or harm to people, property, livelihoods and the environment on which they depend. Risk analyses are commonly used to mean the probability or likelihood of meeting danger or suffering harm and loss.

Risk = Probability (P) x Loss (L). Disaster Risk is the output of risk analysis is usually an estimation or measurement of the risk scenarios.

Disaster risk has been represented as: Disaster Risk = (Hazard x Vulnerability) / manageability, where, Manageability is defined as the degree to which a community can intervene and manage a hazard in order to reduce potential impact. An analysis of probable disaster risk then involves an analysis of the hazard and the community’s vulnerability. Substituting capacity from our disaster equation in the previous section, disaster risk can then be expressed as: Disaster Risk= (Hazard x Vulnerability)/ Capacity

Capacity: This term is used with different meanings in different disciplines. It aims to establish an understanding of the level of risks and its nature. It involves considerations of the sources of risks, their positive and negative consequences and the likelihood that those consequences may occur. Factors that affect consequences and likelihood may be identified. Consequences and likelihood are combined to produce a level of risk.

Industrial Special Risks (ISR) insurance

Industrial Special Risks (ISR) insurance is a type of comprehensive business insurance designed for medium to large-sized organizations with high-value assets and complex operations. It goes beyond basic business insurance by providing broader coverage for property damage, business interruption, and other potential losses.

Here’s a breakdown of key aspects of Industrial Special Risks insurance:

Who Needs ISR Insurance?

• Businesses with high-value assets: This includes companies with expensive machinery, buildings, stock, or inventory.
• Businesses with multiple locations: ISR insurance is well-suited for organizations with operations spread across various sites, simplifying insurance management.
• Complex operations: Businesses with intricate production processes or those susceptible to specialized risks can benefit from ISR’s tailored coverage.
• Examples of businesses that might utilize ISR insurance include:
  • Manufacturers
  • Warehouses
  • Logistics firms
  • Energy companies
  • Construction companies
  • Hospitality businesses

What Does ISR Cover?

ISR insurance typically offers two main types of coverage:

• Material Damage: This covers physical damage to insured property caused by various perils like fire, lightning, explosions, storms, theft, vandalism, accidental damage, and more. It can cover buildings, machinery, equipment, stock, and other tangible assets.
• Business Interruption: This covers loss of income or profits due to property damage. If an insured event disrupts your operations, ISR can help compensate for lost revenue and additional expenses incurred during the downtime.

Benefits of ISR Insurance:

• Comprehensive Coverage: ISR goes beyond basic property insurance, providing a wider range of protection against potential risks.
• Tailored Policies: ISR policies can be customized to address the specific needs and vulnerabilities of each business.
• Risk Management: ISR insurance providers often offer risk management services to help businesses identify and mitigate potential hazards.
• Financial Protection: ISR can help businesses recover from unforeseen events and ensure financial stability.

Things to Consider with ISR:

• Cost: ISR premiums can be higher than basic business insurance due to the broader coverage and potential risks involved.
• Complexity: ISR policies can be complex, so it’s crucial to work with a qualified insurance broker to understand the coverage details and exclusions.
• Limits of Liability: It’s important to ensure the policy’s limits of liability are sufficient to cover potential losses.

Overall, Industrial Special Risks insurance is a valuable tool for medium and large businesses to manage their risk profile and protect their financial well-being in the face of various unforeseen events.