Loss control business interruption

For accidents affecting process plant buildings, the potential for serious or fatal injury to building occupants is the foremost concern. Additionally, in cases where buildings house critical controls or equipment, proper design and siting may also help reduce indirect safety impacts (e.g., due to loss of process control), as well as business interruption costs and property loss from such events. 

Control rooms serving more than one process unit do not present unique hazards when considering the proper location of the building. However, they can significantly increase the size of a loss because of their multiple uses. For example, an incident in one unit could damage the central control room and impact the ability to operate other units. The business interruption financial impact is likely to far outweigh the actual damage repair costs. 

Dow Fire and Explosion Index. The Dow Fire and Explosion Index (3) is a procedure useful for determining the relative degree of hazard related to flammable and explosive materials. This Index form works essentially the same way as an income tax form. Penalties are provided for inventory, extended temperatures and pressures, reactivity, etc, and credits are applied for fire protection systems, process control (qv), and material isolation. The complete procedure is capable of estimating a dollar amount for the maximum probable property damage and the business interruption loss based on an empirical correlation provided with the Index. 

The first factor in the loss causation sequence is the failure to assess and mitigate the risk. Risk assessment is a method that is predictive and can indicate potential for loss. With this knowledge, an organization is able to set up the necessary management controls to prevent these risks resulting in losses, such as injuries, property damage, business interruptions, and environmental pollution. 

Contingent business interruption insurance and contingent extra expense insurance protect a firm against interruption and extra expense losses resulting from damage caused by an insured peril to property that it does not own, operate, or control. There are four situations in which this coverage is used When the insured depends... 

The second stage of the development towards risk reduction is achieved by bringing together all areas where losses arise from accidents - whether fire, security, pollution, product liability, business interruption etc. - and co-ordinating action with the aim of reducing the loss. This risk reduction strategy is synonymous with loss control. 

The component parts of a loss control programme may be considered in terms of protecting one or more of the organisation s assets from accidental loss, and will generally include injury prevention (safety) damage control fire prevention security industrial health and hygiene pollution product liability and business interruption. 

Business interruption further extends the loss control strategy to take account of the fact that time is money, and, as such, any loss of production or service is detrimental to the overall profitability of the company. Hence, business interruption is primarily concerned with the protection of the money asset. Indirectly, however, it serves to maintain the assets of machinery, materials, manufactured goods and methods. 

The final part of the analysis (bottom of Figure 24.21 is the calculation of probable loss of property and loss of business if a fire or explosion were to occur. The area likely to be damaged is estimated from the F EI. The value of the equipment in this area ( 5 million in the exanple) is used to estimate the likely property loss, which is a function of loss control credits. The business interruption loss is estimated based on (1) probable days of outage and (2) annual fixed costs plus before-tax profit. 

Before an accident occurs, you should contact emergency services— medical, paramedical, fire department, police, utilities, bomb disposal, and poison control—to determine their procedures for response. Operation and locations of emergency shutdown switches of equipment must be identified unless it must be operating to prevent further damage or loss. Be prepared to isolate sources of secondary accidents and injuries. As well, provide for interruption of business for sufficient periods to permit thorough investigation. 

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