Covid-19 restart process must be carefully risk managed

Risk managers should be planning now to restart operations and deal with a range of new risks as the initial coronavirus wave subsides, according to specialist property insurer FM Global.

Many companies have mothballed all or parts of their operations in response to coronavirus lockdown measures, or a sharp fall in demand during the Covid-19 pandemic. However, bringing operations back online as government measures are lifted, and working with social distancing, will bring risks, according to Russ Kirby, operations engineering manager for FM Global in the UK.

“When dealing with the immediate crisis, it is easy to forget about the future. Now, companies are finding workarounds – but they must also think of the way ahead and make plans for reintroducing and ramping up production,” he said.

“Once we come out of the present situation and demand rises again, it will be important to manage equipment and processes. It may take time to ramp up production, and the restart process will need to be manged and risk management strategies will need to be in place,” he added.

Most companies will not be able to just “switch on and max out” as they restart operations because it would likely lead to problems and losses, said Mr Kirby “Plant and machinery that has been idle will need to be brought back online gradually and according to manufacturer’s guidelines. And if repairs or parts are required, there could be delays as original equipment manufacturers are not available or demand outstrips supply of key parts,” he said.

Mr Kirby warned that companies must not lose sight of “basic risk management” during the crisis. Supply chains and manufacturing operations are already under pressure at a time when essential products and services are experiencing high levels of demand, he noted.

“A major property and business interruption loss is the last thing anyone needs right now. A fire in a warehouse containing medical supplies, for example, could be disastrous. We all have a part to play to ensure our risks are managed and that we do not add to society’s woes. So, organisations need to make sure they continue to manage their risks,” he said.

Risk managers will need to ensure risk prevention continues for idle facilities, or those operating with reduced staff. Fire and weather losses are the main cause of property loss and risk managers will need to ensure employees still working on site are able to carry out basic loss prevention measures, such as testing firefighting equipment or preparing for extreme weather. For example, ahead of the Atlantic hurricane season, companies in storm-exposed parts of the US will need to be able to execute contingency and response plans.

“Companies need to stay on top of traditional risks like fire- and weather-related hazards, and make sure their buildings and operations are resilient. They need to make sure the people and skills are available to protect property and plant, and that employees onsite are appropriately trained,” said Mr Kirby.

As coronavirus lockdowns are eased, companies will most likely need to abide by social distancing measures until a vaccine is available or the spread of the virus is brought under control. “Risk management will need to recognise a reduction in the workforce from absenteeism or social distancing, which could see staff numbers minimised to ensure a safe work environment. Risk managers will need to think about who will be onsite to carry out loss prevention or emergency response,” said Mr Kirby.

“Organisations need to plan and have a strategy for the months ahead. It’s important not to lose sight of basic loss prevention. As nat cat risk is heightened, businesses need to be mindful that there could be fewer people around to respond to an incoming event, or that ramped-up production could mean that more weather-exposed parts of facilities are in use, when they wouldn’t usually be,” he added.

While many sectors, like travel and hospitality, have ground to a halt, others are dealing with high levels of demand, such as healthcare, pharmaceuticals, food, online retailers, packaging and logistics. Ramping up production and services, however, has risk management considerations, said Mr Kirby. “We already see some companies having to ramp up production in parts of their business, which brings additional challenges and risks,” he said.