Successful emergency plans require vigilance, realistic expectationsReprints
VENICE, Italy — Emergency response plans can limit losses and even reduce the prospect of a catastrophe in the first place, but to succeed they need to be carefully thought through and realistic, a panel of experts said.
And without clearly identified responsibilities and regular testing and updating, the plans may fail in the event of an emergency, they said at the Federation of European Risk Management Associations' 2015 Risk Management Forum being held in Venice, Italy, this week.
A large self-insured retention can be the basis of an effective emergency response plan, said Udo Kappes, head of property insurance and captive management at Airbus Insurance Risk Management.
As a company with a large self-insured retention would face a significant loss in the event of a catastrophe, managers at all levels have a financial incentive to reduce the chances of suffering a significant loss, which encourages managers take part in risk mitigation and loss control efforts, he said.
Airbus has numerous properties and conducts about 160 site visits a year as part of its loss control efforts, Mr. Kappes said.
“When you revisit all the sites over the years you identify not only how to protect risks, but you identify key processes,” and that forms the basis of a business continuity management plan, he said.
Having an emergency response plan in place is also critical in controlling the level of losses in the event of a crisis, said Hans-Peter Wollner, head of business development for Belfor Deutschland GmbH.
For example, if chemicals are released after a fire or explosion, the damage can continue well-after the initial crisis as equipment in the location suffers corrosion if decontamination efforts don't begin quickly, he said.
When constructing an emergency response plan, it's important that worst-case scenarios are considered, but the possible crises considered also need to be realistic, said Rob Harford, group director, head of risk services at Salamanca Group Holdings (UK) Ltd. in London, a financial services and risk consulting company.
“Flights of fancy are not helpful. The plan must be credible, or you can lose team buy-in very quickly,” he said.
The plan should also be clear and easy to read and understand quickly after an event, and it should be distributed to contractors of other companies working on a site so that the response if coordinated, Mr. Harford said.
And once the plan is in place, regular exercises need to take place to test the plan. In addition to testing the effectiveness of the plan, the exercises also ensure the employees read the response plans and know how they are expected to respond, he said.