RISK HANDLING

METHODS

HAZARDOUS
CONDITIONS

Hazard is condition that may create or

increase the chance of a loss arising
from a given peril. Sickness is a
hazard for premature death
Physical hazard- physical properties, e.g.
poor construction, property near a river,
etc.
Moral hazard- dishonest tendencies in the
character of the insured person that may
increase probability of loss
Morale hazard- indifferent attitude
towards insured property, careless
attitude towards preventing losses

Physical hazards
----Storage

Over stacking up to the roof

1. Delay the operation of automatic
sprinklers and even if they operate
the distribution of water will be
impaired
2. Touch the electrical installations
. Highly congested storage area
1. Denial of access to fire fighters
reduce efficiency
2. Heat generation

Physical hazards
Little----Storage
or no space between high

stacks --- create a flue effect drawing

heat upwards to spread fire vertically
Locked warehouses with high stacks
--- many a times small fires which go
undetected develop into a large one
(since warehouses are mostly
unmanned )
Storage in front of open switch boards
, near transformers, adjacent to
electrical installations ---inception of
fire as well as propagation
Storage in front of fire extinguishers

Spontaneous
combustion----

Certain materials undergo rise in

temperature without application of
external source of heat
When stored in bulk or in close
contact with other materials ---a
chemical or physical reaction is
initiated which results in spontaneous
development of heat as a result of
oxidation
Bacterial reaction in organic
materials

Physical hazards ----Electrical

Installations

Overloading the circuit----current

flowing through the main supply cables

increases as additional current consuming
appliances are introduced into the circuit .
Heat generated in the circuit
proportionately increases .
H= I 2 R t

Loose electrical wirings/ temporary

wiring ---- increases probability of short
circuit

Open switch boards ---- possibility of

combustible materials settling in between

the wires and igniting subsequently

Wooden switch boards

Faulty electrical
wiring-------

Physical hazardsHousekeeping

Congestion in work place ---insufficient

floor space

Accumulation of chemicals / wastes on

the floor at the work place -- e.g. cut-pieces
of cloth in a garment manufacturing unit

Inadequate safety during hot work-e.g. necessary precautions not being taken
during welding operations

Poor housekeeping---

Location and exposure

hazards---

Hazardous surroundings---- dry

bushes, hazardous operations in
neighboring factories
No space for fire brigade
Buildings in close proximity to each
other
Temporary sheds
Remote locations
Static electricity / frictions from
machines ---e.g. belts passing over
pulleys or rollers generating static
sparks

Handling the sources of

ignition- Electrical installations----

1. Wirings should be in metal conduits

or in armoured PVC cables
2. Non-combustible materials to be
used for switch boards
3. Closed switch boards
4. Power cables in trenches or through
bus bars
5. No overloading of circuit
6. Double earthing of machines
7. No storage in front of switch boards/
inside panel rooms

Handling the sources of

ignition-Storage

1. Proper stacking and orderly storing

2. Clear space of one and half to two feet
from the roof
3. Preferably storage in pellets and clear
space of one to two feet from walls
4. No storage in gangways, staircase , in
front of FEA
5. Space between high stacks ensure proper
air circulation, space for movement of fire
fighting personnel
6. Main switch outside the storage areas for
cutting off electric supply in case of fire

Handling the sources of

ignitionSpontaneous combustion
1. Stacks should be spaced from each
other as much as possible
2. Regular inspection for over heating
e.g. haystacks
3. Stocks of coal should be upturned at
regular intervals and kept away from
main premises
4. Freshly prepared charcoal should be
kept exposed to air for adequate
time before packing and storing
5. Oily rags/ cleaning rags should be
kept in metal bins and the bins
should be kept away from main

Handling the sources of

ignition-

Waste disposal ----

1. Periodic waste disposal should

be carried out and there should
be a formal procedure for the
same
2. Wastes should be kept in
separate warehouse away from
main blocks
3. Segregation of wastes from
other stocks
4. Install fire fighting
extinguishers near waste

Statutory and other

requirements

Factories Act, 1948 and amendments;

other safety regulations are to be
complied in regard to:
Safety at work
Food and drink regulations
Transport regulations covering aircraft,
ships and vehicles
Safety of persons in hotels, boarding
houses and other premises to which the
public has access
Safety of persons adjacent to premises in
which dangerous processes are carried on

Statutory and other

requirements - Safety

Safety norms and implementing the

statutory
safety
requirements are integral parts of any
loss prevention
system.
Moving and rotating part of machines like
fan belt,
conveyor belts etc. should be covered
or fenced
Machines should operated by trained male
workers, wearing tight fitting clothing
Lifts and hoists should be of good
mechanical construction, and of sound
material and maintained periodically
Examination and maintenance of lifting

Statutory and other requirementsSafety.

Workers are to be provided with
screens or goggles for protection of
their eyes where process involves risk
of injury to the eyes, like dry grinding
of metals by hand welding or cutting
of metals use of electricity
Gas cylinders should be stored in
enclosed area with asbestos roofing
and preferably with wall thickness of
two bricks with proper ventilating
system

Statutory and other

requirements
Electrical installations should be
proper with no
loose wiring, no
open switchboards. Regular
checking of wirings and switchboards
Installation of right type of Fire
extinguishers at correct places
Proper training on safety aspects
should be given
to all the employees
to ensure safe operations at the site
The safety instructions as well as the
directions to safety
exits should be

Contingency Planning
Risk Management is the concern of
top management
Management awareness of risk should
lead to the designing and adoption of
contingency plans for unforeseen
major or catastrophic losses
There can be instances when a small
damage to property or critical
machinery leads to prolonged
stoppage of business
Planning should be such that while
the salvaging operation following the
loss are being carried, the business
should also continue.
It is therefore must that the

Contingency Planning
While preparing contingency plan to
deal with major disaster, the
management must consider the
following:
Identify all potential sources of lossproducing events which may disrupt the
normal operations
Determine the interdependencies between
different parts of the organizations
Determine the dependencies upon the
suppliers and customers
Identifying the alternative sources of
supply or outlet to remove such
dependencies

Contingency Planning
Find the means of reducing the
impact of the potential hazards
as identified, such as :
Availability of Spare plant or
machineries related to the trade
To hold a larger stock of raw
material or finished goods in
different stores/places
Find another supplier or customer
to avoid vulnerability of business to
limited suppliers or customers

Contingency
While adopting above means the
Planning
extra cost involved should
reasonable in regard to the
potential risk

Making arrangements with other

business organization in
competition to produce the goods at
the time of contingency to reduce
the impact on business
Employees must be educated and
trained to take initiative to act and
handle the situation.
Responsibilities should assigned to
each employee who is part of the

Advantages or Benefits
of Risk handling Process

Minimization of risks:The risks

that are handled within the given
assessments plans are foreseen
within the business functions.
It enables one to speed up the data
to change policies and contingencies
that are made successful within the
mapped business functions.

 Awareness about the risks: It

enables one to concentrate on the
risk treatments within the lessons
learnt and are scheduled into lack of
preparation.
Saving cost and time:It threats to
the task that is completed over the
projects and the other business
strategies. It always results in saving
the costs that are consolidated

 Protecting resources:The risk

management plans and policies
under help in protecting the
resources of the organization. It
builds production plans and the
alternative plans or the process of
re-routing.
Improvement in credit
ratings:The improvement in credit
ratings evolves numerous agencies

 Regulatory compliances:This
framework helps in meeting
regulatory needs. It performs and
measures the risk managements.
This improvement helps in attaining
the higher credit aspects.
Values shareholders:It aims at the
borrowing capacity of the
shareholder that has significant
effort within the management and

Disadvantages of Risk
Handling Process

Depends on external
entities:Managing risks depends on the
external entities that are modulated
within the organization, usually depends
on the external data. It includes all the
dependent information about the risks
regarding other valid resources.
Difficulty in implementing:Risk
management takes long time to gather the
information regarding the strategic plans.
It has universal standards that are
mitigated and accepted according to the

 Performance:Since the risk

management can be processed only
with subjectivity, it holds on the
control of prospects within each
issue. It can be identified with the
difficult implementation of controls.
Complex calculations:Risk
management involves complex
calculations in terms of managing
risks. Without the automatic tool