Why Worry?

While the financially oriented actuary will likely reduce probabilities and outcomes of any given event to a list of formulas and percentages, thereby calculating potentials for loss and resultant recommendations for insurance coverage, a lack of boots-on-the-ground operational knowledge may result in a senior leader being presented with a false dichotomy when it comes to making hard decisions with respect to resource allocation. If your operational risk manager has cultivated an open and sincere relationship with your Insurers Inspectors and underwriters (i.e., the folks that do risk assessments and make recommendations on behalf of the insurance company), then he/she should be comfortable with proposing and negotiating comparable mitigation strategies in lieu of stocking critical spares, asking for credit or adjustment to the site's risk score upon compliance. There are several specific actions that I highly recommend, all of which require full explanation and documentation being provided to underwriters: * For large drive motors, particularly for those with long replacement times, employ and thoroughly document a strong predictive maintenance program, Including oil and lubricants analysis that will detect contaminants and other changes Indicative of a forthcoming failure in motors, pumps, and gear assemblies. * For large gears, metal tanks, et cetera, employ and document scanning technology to detect micro-cracks. When I took over the risk management and contingency planning functions at a major mining operation, I was shocked to discover how many "planned-for critical suppliers' were no longer in business (or no longer dealing the specific equipment/ component needed) when I called to verify the "verbal plans" that had been passed down from previous maintenance supervisors. * As related above, don't trust verbal history!