RMs Need New Approach: GE

Corporate risk managers need to implement a program of sophisticated loss prevention policies and processes known as the Highly Protected Risk concept, a specialist in the field advised at a recent industry conference.

Luis F. Arango, a loss protection and chemical technical specialist with Kansas City, Mo.-based GE Insurance Solutions' Global Asset Protection Services unit, spoke in Baton Rouge, La., at a meeting on industrial fire fighting.

By taking this approach, Mr. Arango said, companies will be better positioned to meet shareholder, regulatory and insurance provider expectations and requirements in a global economy.

Mr. Arango recommended companies embrace the Highly Protected Risk (HPR) concept to help management properly mitigate risk exposures. The HPR concept is based on six key principles:

oProper risk management programs and "concerned" management

oConstruction exposure protection

oAdequate interior protection

o Protection against special hazards

oAdequate exterior protection and water supply

oProtected surveillance

Mr. Arango cautioned that while the absence of some of the above elements may not lead to a large loss, not having all elements in place can result in a higher potential for property loss and subsequent business interruption.

"A loss usually affects many of a company's stakeholders," he said. "In many cases, it can tarnish the image or goodwill of the business and require significant resources to help it recover."

Mr. Arango noted, "The current environment of corporate mergers to increase synergies and enhance performance for shareholders has created significant demand for proper risk evaluation and loss control."

Those pressures, he said, can increase a risk manager's responsibilities "when faced with fire, explosion or other types of property damage, to protect the resources and assets a company needs to remain competitive and provide uninterrupted service."