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SKF – liability risk management with quality

Wind power – megascale engineering with challenges

IF´S RISK MANAGEMENT JOURNAL 2/2010 3

EditorialContents

PublisherIf Niittyportti 4, EspooFI-00025 IF, Finland +358 10 19 15 15www.if-insurance.com

ISSN 1459-3920Frontpage Vestas Wind Systems A/S

ProductionMarkkinointiviestintä Dialogi OyPrintingForssa Print 2010Changes of [email protected]

Editor-in-chiefJuha EttalaEditorial boardOlav Breen Ken HenningsonJukka HonkaCarita HämäläinenLars von HertzenHarry NordqvistAnna Maria Vähäkuopus

This summer, If launched its new marketing concept with the slo-gan ‘claims handling the way it

should be’. Our commercials are focus-ing on our excellent claims-handling service – a quite natural position, of course, since an insurance company’s real product is after all its claims-han-dling service.

However, not all customers will ex-perience this ‘product’, fortunately enough, perhaps. And it can be difficult for a customer to assess the quality of an insurance company’s claims handling without having experienced a claims situation – unfortunately for us at If! That is why in our marketing we focus on testimonials from real clients who share their experiences of real claims.

Practice make perfect. At If, we handle more than 1.3 million claims per year, that is 3800 per day or 3 per minute. Claims handling is in fact a rather complex business process, as it ranges from small and frequent claims

CLAIMS HANDLING THE WAY IT SHOULD BE…

where good systems and effective processes are essential, to the largest claims where competence and business acumen is of vital importance.

Naturally, the quality of the claims-handling service is important regard-less of the claim size. But the quality of handling large claims can be crucial as they have a serious financial effect on a company. More than one If-customer a week experiences a claim of more than EUR 1 million, and annually we handle several claims exceeding EUR 10 mil-lion. We believe it should be reassuring for our clients to know that at If we in-disputably have the widest experience of handling large claims for Nordic corpo-rations, both in the Nordic region and in the rest of the world. When a large claim occurs, we do not panic, we know how to react, and we know how best to support our clients. This is the ‘moment of truth’ for us as an insurance com-pany, and at If we are truly passionate about supporting our clients in the best

possible manner when something goes wrong.

This is why we believe that what you get from If is ‘claims handling the way it should be’. •

MORTEN THORSRUD

Head of Business Area Industrial

KLAUS VOGEL

Head of Industrial and Commercial Claims

2 IF´S RISK MANAGEMENT JOURNAL 2/2010

Loss prevention strategies in a recession 24

SKF – liability risk management with quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Wind power – megascale engineering with challenges . . . . . . . . . . . . . . .6

How might companies thrive after the economic crisis? . . . . . . . . . . . . . . . . . . . .10

Towards a logistics centre with enhanced fire safety . . . . . . . . . . . . . . . . . . . . .12

What else is new? . . . . . . . . . . . . . . . . . . . . . . .17

Ensure your sprinkler installation works properly . . . . . . . . . . . . . . . . . . . . . . . . . .20

A threatening fire that did not affect production . . . . . . . . . . . .22

Loss prevention strategies in a recession . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Accident risks and safety management in maintenance . . . . . . . . . . . . .26

Plan carefully if you disconnect fire protection systems . . . . . . . . . . . . . . . . . .29

News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Appointments . . . . . . . . . . . . . . . . . . . . . . . . . .31

Towards a logistics centre with enhanced fire safety 12

SKF – liability risk management with quality 4

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SKF is something of a Swedish clas-sic. The company is a world lead-er in bearings and seals, with ball

bearings being its best-known product. With over 40,000 employees and a turn-over of SEK 63 billion, SKF has manu-facturing sites in over 80 locations world-wide, sales companies in 70 countries, and 10,000 distributors and dealers.

SKF’s products are extremely com-mon. A typical household in the Nordic

countries probably has around 200, in everything from washing machines to ov-ens and electric blenders, as well as in the car, bicycle and lawn mower. And the same is true for industry; SKF is every-where. Even in extremely risky businesses.

When you consider the huge conse-quences of, for example, an oil rig being damaged, you quickly understand that SKF’s insurance cover needs to be ex-tremely comprehensive, which it is , and

that it is also extremely important for SKF to do everything humanly possible to pre-vent accidents caused by its products.

Two of the people with the main re-sponsibility for ensuring this are Klas Iloson, Managing Director of SKF’s re-insurance company, and Håkan Larsson, Risk and Insurance Manager at SKF.

Håkan Larsson highlights three key areas in the work of minimising the risks for SKF.

SKF– liability risk management with qualityTheir products are critical components in the most dangerous businesses there are – nuclear power stations,

oil rigs, aircraft – throughout the world. They could be a real nightmare for an insurance company. But instead,

Swedish ball bearing giant SKF is an impressive role model: amazingly well run and completely focused on

becoming better all the time.

Håkan Larsson, Risk and insurance manager at SKF and Klas Iloson, Managing Director of SKF’s re-insurance company.

The first is to ensure all the compa-ny’s products are of the highest quality.

SKF has a long tradition of quali-ty. There are no compromises in quali-ty issues of any kind – not in purchasing, not in production, not in customer re-quirements.

The company has prepared well-func-tioning and user-friendly processes for each critical area that must ensure the quality of its work, and must be adhered to across the whole company. The proc-esses are published on SKF’s intranet, so that everyone has access to them.

Being aware of quality is a concept accepted across the entire organisation in way that is not often seen.

“We don’t encounter any resistance when we make demands for improve-ment at a facility. This isn’t seen as a burden. On the contrary, quality efforts are seen as something that provides se-curity,” says Klas Iloson.

Håkan Larsson also points to the agreements SKF enters into as an impor-tant factor for limiting the risks faced by the company. These agreements clearly define SKF’s responsibilities towards its customers if anything undesirable hap-

pens, when each party is liable to pay compensation, and when not.

A third important factor is that all in-cidents above a certain level are report-ed to the central risk unit at SKF, which analyses what has happened and ensures that the company learns from it and car-ries out any changes required to prevent it happening again, even if this is neces-sary across the entire Group.

SKF can show in black and white that quality work provides results. To take just one example, the number of em-ployees who have been affected by work-related injuries and illnesses has fallen by 90% since 1994. SKF is now working to-wards a zero target in this area.

However, it goes without saying that even companies as ambitious as SKF need to have an insurance programme, since global manufacturing companies are always affected by claims, no matter how skilled they are.

SKF has placed its global liability in-surance (and its recall insurance) with If. The liability insurance provides eco-nomic protection against compensation costs for SKF if, for example, a critical ball bearing fails and causes a machin-

ery breakdown in a production facility leading to production stop.

If’s liability programme is based on a global master insurance policy which is complemented by local policies where required.

As always in this type of insur-ance programme, If carries out what is known as a ‘navigator survey’ of the cus-tomer’s potential risk.

The survey shows both the compa-ny’s exposure and preparedness from a number of different perspectives, and highlights both strengths and weaknesses.

The main aim of this analysis is to provide a basis for a correct quote. However, the analysis is increasingly al-so functioning as a starting point for discussions between If and the relevant company on the weaknesses that exist and how they should be dealt with, al-though, with SKF, the list of actions re-quired was actually record-breakingly small.

“This is one of the best results I’ve ever seen from a navigator,” says Matti Sjögren, If ’s Liability RM Specialist.

If ’s Underwriter Per-Ola Salander adds:

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“SKF has implemented an extremely ambitious risk management programme. This obviously doesn’t just sit in a fold-er on a bookcase collecting dust, but is used daily in the business. The results can be seen, among other things, in our navigator survey, but it also shows up in fewer claims than would otherwise have been the case.

Klas Iloson and Håkan Larsson are proud of their successes, but are not sat-isfied.

“Quality work is a continual process that takes time. We are doing well today. But in ten years, we want to be even bet-ter,” concludes Klas Iloson. •

ULF BÄCKMAN

[email protected]

IF´S RISK MANAGEMENT JOURNAL 2/2010 54 IF´S RISK MANAGEMENT JOURNAL 2/2010

Wind power has been used as long

as humans have put sails into the

wind. For more than 2000 years

wind powered machines have

ground grain and pumped water.

Today wind powered machines

include Wind Turbine Generators

(WTG) for the production of

electricity.

With the development of the electrical power distribution network, wind power found

new applications in lighting buildings remote from centrally-generated power.

Throughout the 20th century, par-allel paths developed distributed small wind plants suitable for farms or resi-dences, and larger utility-scale wind gen-erators that could be connected to elec-tricity grids for remote use of power. To-day, wind-powered generators operate at every size between tiny plants for bat-tery charging at isolated residences, up to multi-megawatt wind farms that provide electricity to national electrical networks.

The first known WTG for electrici-ty production was built in Scotland 123 years ago by electrical engineer and ac-ademic Professor James Blyth. It was a 10 m high, cloth-sailed wind turbine, which was used to charge batteries to power the lighting in his cottage, thus making it the first house in the world to have its electricity supplied by wind power.

– megascale engineering with challengesThe wind turbine built by Charles W Brush in 1888 was 60 feet tall.

Blyth offered the surplus electricity for lighting the main street of the city, but people turned down the offer as they thought electricity was ‘the work of the devil.’

Across the Atlantic, in Ohio, USA, a larger and heavily-engineered ma-chine was designed and constructed in 1888 by Charles F Brush – supposed-ly the first automatic WTG. This was built by his engineering company at his home and operated from 1888 until 1908 when it was decommissioned. The Brush wind turbine weighed 40 tonnes, had a rotor 17 m in diameter and was mounted on an 18 m tower. Although large by today’s standards, the machine was only rated at 12 kW; it turned rel-atively slowly since it had 144 blades. Over its 20-year life, the turbine nev-er failed to keep his home continuous-ly powered. The maintenance cost is not mentioned in the literature.

Development of wind generated power

Currently, 2% of the world’s electrici-ty usage is supplied by WTGs, and they have grown in size, cost and complexity. Some challenges are still the same as in 1887, such as the power being non-dis-patchable and economically viable, but, of all currently available renewable en-ergy sources. wind power is thought to be the most likely to replace fossil fuel in the generation of electricity in the 21st century.

Most wind farms are far from demand centres, requiring substantially more money to construct new transmission lines and substations. In some onshore regions this is partly because frequent strong winds themselves have discour-aged dense human settlement in espe-cially windy areas. The wind which was historically a nuisance is now becoming a valuable resource, but it may be far from large populations which developed in ar-eas more sheltered from wind.

The modern wind power industry began in 1979 with the serial produc-tion of wind turbines by Danish manu-facturers Kuriant, Vestas, Nordtank, and Bonus.

These early turbines were small by today’s standards, with capacities of 20–30 kW each. Since then, they have in-creased greatly in size, with the 198 m high, 126 m rotor diameter Enercon E-126 capable of delivering up to 7.58 MW. In the same period, wind tur-bine production has expanded to many countries.

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6 IF´S RISK MANAGEMENT JOURNAL 2/2010 IF´S RISK MANAGEMENT JOURNAL 2/2010 7

Introducing the WTG as a compet-itive small powerplant has increased the demand for high output at an increas-ingly lower cost. Since the primary cost of producing wind energy is construc-tion and there are no fuel costs, the aver-age cost of wind energy per unit of pro-duction depends on a few key assump-tions, such as the cost of capital, mainte-nance and years of assumed service.

In 2009 the rated worldwide pro-duction capacity of installed WTGs was 159 GW, having doubled in the pre-vious 3 years, and still growing rap-idly. Measured production output in 2009 was 340 TWh, equivalent to 2% of world electricity usage.

For reference: 1 GW equals 109 W or 1,000,000 kW and 1 TW equals 1012 W or 1,000 GW.

Damage and loss to wind farms challenge both insurance companies and technology

Wind farms represent a multi-million euro investment, and are usually insured against damage and loss.

If is the leading Nordic insurer and has a long tradition of insuring WTG projects at every stage from construc-tion, during operation, through to final decommissioning both on and offshore.

Relevant insurance covers are Car-go (transportation of parts to and from the site), CAR/EAR (assembly and lifting of parts on site and final com-missioning), PD/BI (repairs and usu-al operational perils like lightning, fire, storm, machinery breakdown, and business interruption following these) and Liability.

Type of equipment, cost of replace-ment, climate, accessibility, geography, weather and local conditions are a few of the factors that are taken into consid-eration when the probability and sever-ity of a loss to a wind farm is assessed. Wind farms come in many sizes and edi-tions, they are located worldwide and therefore the risk profile is not uniform. Insurance terms and conditions and pre-mium therefore vary.

Repair of a WTG always involves high costs and it can be difficult to find a calm weather window which allows lifting operations in case damaged parts must be replaced.

Some factors can reduce the costs, for instance if many wind farms are lo-cated in the same area, spare parts are stored locally, and a dedicated serv-ice team including a large crane is serv-icing the area. In addition proven tech-

nology and redundancy or contingency plans play an important role in setting the premium level.

In general offshore works are more complicated and risky. The erection cost of an offshore wind farm is approx-imately 50% higher than an onshore wind farm. Repair time for offshore wind farms is currently much long-er than onshore farms. There is a short-age of installation vessels, and to release a vessel hired in for another project for immediate repair is almost impossible, and if not, at least very costly.

No international norms are available for WTGs, and defining proven tech-nology is therefore a difficult task. Real life testing and verification of design as-sumptions often rest on field trials, due to the size and complexity of the struc-ture. Proven type WTGs are often seen in an upgraded version 15 or high-er. Software updates are easily applied to earlier versions, but retrofitting actu-al parts is more difficult and sometimes even impossible.

New technology can solve many is-sues, but it can also increase risk levels, and competition is increasing. Cost con-siderations and optimisation is part of every major WTG manufacturer’s strat-egy, but the dynamic loads which are in-troduced to the substantial components are extremely high and the effect can be difficult to calculate even with the com-puter technology available today.

When losses occur – other than those caused by lightning or storm – common causes are often found to be either de-fective material, defective workmanship, or defective design.

Problems can arise from bad materi-al quality, insufficient internal controls during manufacture, poor craftsman-ship, or fatal design errors.

Most recently a serial loss due to a faulty design of the grouted connection of the transition pieces of steel monopile towers of offshore wind turbines was re-ported. Steel monopile foundations ba-

sically consist of three parts: 1) a 450 (or larger) ton steel pile which is driv-en approx. 30 m into the seabed, 2) the steel transition piece sleeve which is 6 m long and 40 to 90 mm greater in radi-us than the monopile and tower, and 3) the steel tower on top. Monopiles can never be driven perfectly straight into the seabed and the transition piece was introduced on top to eliminate the mis-alignment. It is positioned and levelled by jacks, concrete is inserted, the posi-tion is fixed and the tower is aligned. Over time the cyclic loads have shown to cause cracks in the grouted connec-tions and, as a result, the transition piece moves downwards. The problems are mainly seen on offshore wind farms with many operational hours. Hundreds of grouted connections are in need of re-pair and currently potential solutions and design alternatives are discussed. •

Height of steel tower: > 90 m Diameter of rotor: > 90 mNumber of rotor blades: 3Avg. value per WTG: 2.5 MEUR Average output: > 2 MWTip speed: > 320 km/hLocation: Onshore or offshore

where strong winds blow.Cut-out wind speed: 25 m/sDesign life time: 20 years (similar to the Brush

WTG of 1888)

Year 2005 2006 2007 2008 2009GW 59 74 94 121 159 *) installed wind turbine generated capacity world-wide

What does a modern high output WTG look like

Installed capacity in GW

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MICHAEL JOHST

[email protected]

We at If hope to meet you there!8 IF´S RISK MANAGEMENT JOURNAL 2/2010

Whatever happens in the economy, the media is sure to publish it across the

world. This information flow improves people’s awareness of events and in-creases their level of concern, in many cases for no reason. An owner of a car repair shop in the mid-west of the USA, for instance, was observed fretting about how the Greek loans would affect him and his business. The media has a strong psychological influence on people and the market, their decisions, and confi-dence in the future.

Europe grows on debt while China is fuelled by increased labour

In the world economy, central banks and governments continue to pursue re-covery policies. Western countries are managing to sustain growth, although at a slower rate than usual.

“European growth has been based on taking out loans, i.e., debt. Since we have increased borrowing year after year, our growth is not ‘healthy’”, explains Rantanen.

In China, however, economic growth shows no signs of deceleration. Unlike Europe, China is growing through the migration to the cities of its rural work-force, rather than through credit. These urban newcomers then begin to work, produce and consume, creating a gen-uine and stable basis for growth. China is currently growing annually by some 10%, India by 8–9% and Brazil by 7–8%, healthily.

According to Rantanen, the Chi-nese government is also making other shrewd, rational moves. In order to pre-vent growth from becoming too rapid, the government has decided to relax its

currency regime. Thanks to revaluation, growth will decelerate in the right man-ner. Rantanen believes that, in the fu-ture, and sooner than expected, China will play an even larger role in the world economy.

At the moment, Europeans wor-ry about the PIIGS countries: Portugal, Ireland, Italy, Greece and Spain. Ran-tanen believes, nevertheless, that the ECB and EU have a firm grip over the euro area. In the future, in order to pre-vent bubbles from forming, govern-ments will regulate banking more tightly.

More operative boards

In spite of the economic situation, com-panies in Finland have retained strong earning power. However, the econom-ic uncertainty has alerted companies and their management to scrutinise their op-erations and environment in a new light. According to Rantanen, this is showing clearly in the current activities and divi-sion of tasks between boards of directors and management teams.

A survey conducted in Finland by Deloitte shows that more than 80% of boards are monitoring their company’s financial standing more closely than be-fore, and that half of the respondents has placed certain business elements un-der particular surveillance. Boards are al-so meeting more frequently.

“Boards are now monitoring man-agement teams more intensively and participating more closely in operations. Naturally, this reduces the freedom of action of management teams, as boards enter their territory”, states Rantanen.

Management teams are required to give more detailed reports on the meas-ures they have taken, and to give more

detailed justification of investment pro-posals. Strategy issues are reassessed, and financing arrangements, in partic-ular, are analysed with extreme care. As many as two thirds reported having in-vested in internal control and risk man-agement, either somewhat or markedly more than before.

This active role taken by boards al-so requires the discovery of more skilled board members.

“To be able to take the right deci-sions, board members must have deep-er knowledge of the company’s business, markets and international developments. Experts are hard to find and the search for board members must cross Finnish borders.”

Increasingly, companies must include specialists from various parts of the world on their boards. Following the Far East markets, the next enticing con-tinent in line will be Africa. Although a difficult and challenging target for Finn-ish companies, it boasts ample potential.

Role of risk management increasing further

During the economic crisis’ acute phase, risk management, corporate social re-

There have been no changes in controls or risk management

Other, specify

The company has launched information system projects to

develop automated controls

The company has strengthened its internal auditing resources

The company has drawn up more detailed guidelines for, e.g., the approval

of procurement authority

Controls and risk management have been arranged earlier; no need for increased

focus on these

Somewhat greater focus has been placed on controls and risk management

Significantly greater focus has been placed on controls and risk management

20 %

17 %

4 %

12 %

20 %

16 %

23 %

55 %

9 %

40 % 60 % 80 % 100 %0 %

None of the above

Other

Monitoring of possible malpractice

Sustainable development

Management compensation

Risks related to contractual partners

Impairment tests

Financing arrangements

Risk management

Issues related to internal controls

Issues related to corporate structure

Strategy-related issues

Financial reporting

Communicating on issues affecting the company’s share price

20 %

2 %

4 %

0 %

8 %

6 %

16 %

14 %

59 %

45 %

13 %

24 %

63 %

54 %

12 %

40 % 60 % 80 % 100 %0 %

Changes and areas of emphasis in Board operationsWhich of the following sub-areas have become emphasised in Board work during the period of economic uncertainty?

Changes in internal control and risk managementWhat changes have been made in internal controls and risk management due to the economic uncertainty?

The diagrams are part of the results of the Deloitte Board Forum 2009 survey. This survey was sent to the board members of companies listed in NASDAQ OMX Helsinki in Finland.

Deloitte Finland’s CEO Teppo Rantanen.

sponsibility and requirements for sus-tainable development may have been temporarily set aside. As financial per-formance improves, they will return to the agenda, since companies will want to ensure that everything is in order.

“Alongside investments in risk man-agement, it is simultaneously necessary to influence corporate culture and busi-ness practices. The only way to make genuine improvements in corporate cul-ture is to change the way people think. Mere general or specific written guide-lines will not suffice; change must be in-corporated in all communications and actions. The message and the example must come from top management”, de-mands Rantanen.

Finnish companies have an advan-tage in that they are used to playing fair, doing the right rather than the wrong thing. In terms of risk management, too, this is very good news. As compa-nies globalise and increasingly recruit in-ternational staff, practices multiply and the Finnish way is no longer the on-ly option. In such situations, corporate management must communicate clearly on the desired practices.

Where are the new Nokias?

Rather than the prospect of a double-dip recession, Rantanen is more con-cerned about how Finland can be ren-dered more attractive to employees and companies.

“What will happen to Finland if we fail to produce new, strong innovators like Nokia?” he asks.

Although Nokia’s contribution to Finnish GDP has fallen from 4 to 1.8%, it is still a highly important share. If the Nokia engine falters, the impacts will ripple across the Finnish economy.

“We therefore need to discover a wid-er variety of new, innovative businesses from various industries. The world lacks both water and energy, and Finland has expertise in both. Perhaps new corporate engines will emerge around these tech-nologies”, concludes Rantanen. •

ANNA-MAIJA NORDLING

How might companies thrive after the

ECONOMIC CRISIS?Storm winds have swept through the world economy.

Before the summer, Deloitte Finland’s CEO, Teppo Rantanen, sat down

together with Juha Ettala, Head of Risk Management Services at If Industrial,

to consider the current and future economic impacts and challenges facing

Finnish companies, in terms of business and risk management.


The 10-hectare logistics centre has become commonplace as a dis-tribution node: training shoes

made in China for shipping to Copen-hagen, Swedish paper reels bound for Amsterdam, jeans from India headed for Helsinki, mobile phones for Oslo, and household appliances for Stockholm.

In a globalised world, logistics cen-tres markedly enhance supply chain ef-ficiency. In these centres, commodities shipped in from factories are organised and sorted for delivery to end customers.

Because the quantities of goods are large, the fire loads are high. A single lo-gistics centre can easily cover the area of a dozen football pitches. With regard to cubic content, modern logistics centres outrank the Pyramid of Cheops. The largest risk by far is posed by fire. High stacks enable fire to spread quickly.

What would happen if...

What would happen if a fire were to start in a building with a high fire load and large fire compartments? The question is relevant, since even a small fire can cause property damage and service interrup-tions running into millions of euros.

When the protection level of logistics centres is being determined, account is taken of both normal design criteria (the quality, storage method and height of the commodities) and fire spread rates. If the estimated fire development in the target is so rapid that fire-fighting forces would be unable to limit or extinguish the fire, the target must be equipped with an automatic fire-extinguishing sys-tem. This will prevent the comprehen-sive flashover of the fire compartment and avoid the related property and per-sonal risks.

Towards a logistics centre with

ENHANCED FIRE SAFETYThe trend towards increasingly large logistics centres and storage heights

poses increasingly tough demands on automatic extinguishing systems.

The surest way of impacting on this issue is to follow the recognised

sprinkler design rules carefully, says an experienced safety expert.

The sprinkler system must be designed and installed by the book

As logistics centres become larger, au-tomatic extinguishing systems are tak-ing a central role. If a system fails to ex-tinguish a fire properly, the advancing blaze is free to do its worst, gutting the entire building.

“The primary element in fire safety is a fixed automatic extinguishing or sprinkler system designed and installed in accord-ance with the rules. It must be coupled with an automatic fire alarm system that detects the generation of combustion gas-es at a very early stage,” Willberg states.

A sprinkler system comprises wa-ter pipes running, for instance, along the lower surface of the ceiling and possibly through shelving. These pipes are fitted at short intervals with sprinkler heads, hav-ing small glass bulbs containing a liquid

that forcefully expands when it heats up.As a fire ignites, a bulb breaks at a

predetermined temperature (often, at 68 or 74 degrees), after which the sprinkler head starts spraying water onto the fire. Because insurance companies have ver-ified the effectiveness of sprinkler sys-tems, fire insurance premiums are con-siderably lower in sprinkler protected buildings.

“A well-designed and properly in-stalled sprinkler system will not allow a fire to spread, but will contain or extin-guish it where it broke out,” Willberg ex-plains.

For sprinklers to function in the de-sired manner during a fire, they must be dimensioned and installed by the book. The ‘book’ Willberg is referring to is ei-ther the CEA’s or CEN’s sprinkler rules, or the US standard NFPA 13. The best

way is to implement your sprinkler sys-tem correctly from the very beginning. Otherwise, the entire automatic extin-guishing system will amount to no more than a set of pipes in the ceiling.

It is also important to note that oth-er insurers may not permit a setup de-parting from the rules agreed with the present insurance company. This is one reason why the sprinkler system must be designed and installed by the book from the outset. The operator of the sprinkler system is responsible for the maintenance and servicing of the equipment.

Fire breaking out in an unprotected area can cause extensive material dam-age. Willberg recommends extending an automatic extinguishing system into all areas, including offices and loading docks, even if the sprinkler specifications

Risk engineer Lars-Erik Willberg from If has filled in many a safety report over his career. He is also well-versed in the risks of logistics centres.

“One of our duties is to support our logistics customers in building safer op-erating environments. Managing logis-tics risks provides a crucial competitive advantage in various sectors; its signifi-cance is further magnified when a com-pany goes international.”

Despite change in the operating en-vironment, the principles of fire protec-tion remain the same.

“Effective fire protection methods do exist. Fire-safe constructions as well as automatic extinguishing and fire alarm systems form the foundation for all of this. In this sense, it’s worth making hay while the sun shines, so to speak,” says Willberg.

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do not call for this. “Otherwise, the ex-tinguishing system will be overloaded with the fire growth, leaving insufficient water for the most critical seat of fire. In turn, this may result in the entire build-ing burning to the ground.”

Some level of disruption to distribu-tion operations is almost certain to oc-cur as a consequence of major prop-erty damage, and is a factor determin-ing the extent of losses. “Although a steady stream of products is continuous-ly shipped from countries in the far east, these manufacturers cannot make sud-den increases in their production vol-umes. A fire in a logistics centre can thus mean the loss of several months’ sales. The goods fail to appear on the market, and are not available for busi-ness operations, which hurts the brand,” Willberg explains.

He recalls a few major internation-al fires that have become textbook cas-es in the risk management of logistics centres. These include the fire at the spare parts warehouse of an internation-al car manufacturing giant in Cologne in 1977, as well as the burning of the large spare parts warehouse, measuring several hectares, in Warrington, UK, in the 1980s.

The increasing size of logistics cen-tres has placed even more importance on correct design of automatic extinguish-ing systems. “This is based on the mate-rials and products transported via the lo-gistics centre as well as the shelving so-lutions. The system must be designed in accordance with the type of goods and storage arrangements,” Willberg states.

The user’s special characteristics may not always be taken into consider-

ation at leased facilities, which is clearly a weakness. “Close cooperation between the constructor and the leaseholder at the planning stage is important, even if only to ensure that the leaseholder can secure a reasonable insurance policy cov-ering its operations.”

Methods for reducing smoke and soot damage

Various efforts can be made to ensure the safety of logistics centres. Fire de-tectors are devices that can be used for detecting the generation of combustion gases at an early stage. Owing to these, smoke damage can also be limited.

In order for the fire department to be able to locate an alarm quickly, there must be a sufficient number of address-able fire detectors. A correctly designed system will also cut off power to the de-

vice that has caused the fire hazard, as well as shutting down air conditioning and closing fire-doors.

“To give you an example, the logis-tics centre’s offices may contain electri-cal devices that further increase the fire hazard. Cutting off power to these spac-es is a good way of limiting damage.”

A major goal in fire protection is to prevent the fire and combustion gas-es from spreading beyond the fire com-partment. The key passive protection method lies in dividing a building into smaller parts by means of constructions forming fire compartments. An even better solution would involve operating the logistics centre from two or more buildings.

Dividing the logistics centre into fire compartments gives the organisation the opportunity to avoid a full-blown break

for cables and ventilation ducts are made using fireproof seals and automatically-closing fire shutters.

“If, say, a conveyor track runs through the firewall, it must be equipped with a mechanism which shuts the opening completely to fire, prevent-ing it from spreading along the convey-or track to the other side of the wall.”

Fire-doors must provide the same level of fire safety as the wall in which they are installed. They must also be self-closing.

Fire compartmentalisation forms part of ensuring the continuity of operations at a logistics centre. Structures form-ing the compartments must be main-tained and someone within the company must be designated as being responsible for the related procedures. The trigger mechanism of the compartment doors

in its operations, and to continue oper-ating, albeit at limited capacity. The fire compartmentalisation of a building can be divided into three parts: compart-mentalisation by area, storey, and op-eration. Operational compartmentali-sation refers to a situation in which, for instance, flammable liquids and gases as well as aerosols are stored in a dedicat-ed compartmentalised space. The charg-ing of electric forklifts’ batteries must al-so be carried out within such a space.

Firewalls extend from the floor to the ceiling and beyond

The structures forming the compartment must be free-standing firewalls extending from floor to ceiling and beyond, ensur-ing that the fire cannot escape from the compartment. A firewall may not include any attic spaces or beams. Penetrations

1 Obtain a sprinkler system complying with the rules, plus a fire alarm system.

2 Divide the logistics centre into several fire compart-ments and, preferably, into two or three buildings.

3 Obtain conveyor solutions of a type enabling the full closure of fire shutters in the firewall.

4 Obtain central heating boilers and avoid installing gas pipes inside the logistics centre.

5 Use non-combustible construction materials, includ-ing insulation. The structure forming the compart-ment, i.e. the firewall, must extend above the ceiling.

6 Remember to ensure the fire safety of waste man-agement: detached shelters for pallets and internal-transportation boxes should be used.

7 Office spaces, IT facilities and forklift parking and battery charging facilities must be compartmental-ised and protected.

8 Make a business continuity plan and update it regu-larly.

9 Take neighbours and natural phenomena into ac-count. Do not build your logistics centre in the backyard of a fireworks factory or in an earthquake zone.

Nine effective rules of thumb:

SHU

TTER

STO

CK


In order to find out causes and fac-tors related to losses we conducted a small survey in If. When looking at

large losses amounting up to more than 500 000 SEK or 0.5 million euros re-ported to us in 2009, we could see that three main causes of loss can be identi-fied: electrical, events involving hydrau-lic oil and housekeeping issues.

In the ‘Other’ segment (totalling 25%), losses involving molten materi-al were included, so, because this area is specific to the primary metal industry, it is not discussed in this article.

WHAT ELSE IS NEW?

Various studies using the Loss Causation Model help to determine the root

cause of losses in accidents, and every study reveals that accident prevention

requires leadership by management on safety issues. Also, a loss management

system and the attitude to safety of all employees involved go hand-in-hand.

When I told my British colleague about these results he expressed my own feelings, saying “what else is new?”, in-dicating that it is well known that, in all industrial insurance markets, the main cause of losses over a long period of time is the same – electrical.

So again it has been shown that loss prevention is of the utmost importance, and the following tips may be of use in many various industries.

Tip 1: Measurement and testing

Electrical installations must be tested at

must be tested at regular intervals. Regular testing of fire-doors and

shutters is of the utmost importance. Observations during site inspections by If have demonstrated that such tests are required. As best practice, we recom-mend these tests be performed weekly.

“Motivated, professional staff are also significant with regard to safety. For in-stance, an increasing number of compa-nies are training their staff to use first-aid extinguishing equipment. These compa-nies understand the importance of suf-ficiently frequent training, rather than merely planning procedures on paper,” Willberg says.

Building materials play a crucial role in fire protection. These must be of a type that is resistant to the spread of fire. So-called sandwich structures, with insulating inner components made of polyurethane or polystyrene, have prov-en to be poor solutions in terms of fire safety. The insulation can burn fierce-ly, with the structure quickly losing its shape. Burning insulation generates a great deal of combustion gases and soot.

It is important to acknowledge the fire risks related to heating of logistics centres, particularly in Central Europe in which natural gas is a common source of heating energy. Natural gas provides inexpensive heating but also entails risks, particularly when the burners are in-stalled inside the building. “The saf-

and the entrance must be allowed only using key cards and pin codes.

Even meticulous preparation is not always sufficient to avoid damage. Thus, a logistics centre needs an up-to-date continuity plan indicating, for example, when and how operations will be carried on in the event that the facilities have been destroyed.

The modern approach entails com-puter communications between mem-bers of the transportation chain. Termi-nals and transport equipment have been computerised, barcodes are utilised in the transportation process, transport documents are sent in electronic format, and so forth. The continuity plan cov-ers the measures that the company must undertake in order to resume normal operations quickly. Since the continuity plan must correspond with each compa-ny’s operations, it can only be drafted by companies themselves.

“It is very important to keep the con-tinuity plan up to date, since backup fa-cilities must be secured very quickly. If, for instance, a logistics centre were to be destroyed in a fire today, the plan must indicate which contacts should be used first in enquiring about backup facili-ties. The continuity plan must be realis-tic and not based on the vague idea that there are plenty of facilities to choose from if need be.”

Goods may also be moved to interim storage in the logistics company’s facil-ities; these storage sites serve as impor-tant buffer storage with regard to risk management.

“When analysing risks, one should concentrate on spots in which risks ac-cumulate. When planning the location of storage, it should be ensured that it is not next door to a fireworks plant or located in an earthquake zone or near a river re-nowned for flooding,” Willberg adds. •

est solution is to build a separate boiler house, from which heated water is dis-tributed to the logistics centre’s heating system through pipes.”

Smoke removal and sprinkler system must operate in tandem

During a fire, automatic smoke remov-al equipment serves to protect people evacuating the building. Easily opened smoke vents or easily started blowers ex-pedite rescue and extinguishing opera-tions. But it is also worth ensuring that the smoke removal system is compatible with the sprinkler technology.

Sprinkler design rules call for manu-al initiation of smoke vents. In extraor-dinary circumstances, automatic smoke removal may be allowed, in which case the triggering temperature must be at least 30ºC higher than that of the sprin-klers. Otherwise, a situation may arise in which hot combustion gases trigger sprinklers at the wrong locations. This will lead to the fire spreading beyond the designated area and the overloading of the water source, resulting in exten-sive damage.

Willberg remembers a fire at an in-dustrial site, in which, assuming that the sprinklers had extinguished the fire, the fire department cut off the water sup-ply to the sprinklers and left to engage in smoke ventilation. However, the site, filled with combustion gases, flared up again and was destroyed.

For these reasons, a modern logistics centre should be equipped with state-of-the-art technology: the key fire pro-tection component comprises the sprin-klers, fire alarm system, automatic fire-doors, automatic shut-off of ventilation during a fire, and the smoke removal system.

Fires are always easier to prevent than extinguish. For instance, stacks of pal-lets comprise a fire load that will quick-ly escalate an outbreak of fire into a con-flagration. Pallet stacks must therefore be stored separately from the actual lo-gistics centre, with no highly flammable materials placed in their vicinity.

Waste must also be removed immedi-ately from storage facilities, into a waste shed placed at a distance from the oth-er buildings.

The fence surrounding the area con-stitutes an important method of protec-tion against arson. The monitored area can be substantially expanded by means of camera surveillance. Individuals with-in the logistics centre area must carry an appropriate personal ID card at all times

35 % Electrical

20 % Hydraulic Oil

8 % Waste - Arson

7 % Explosion

5 % Hot work

25 % Other

A modern logistics centre

should be equipped

with state-of-the-art

technology: the key fire

protection component

comprises the sprinklers,

fire alarm system,

automatic fire-doors,

automatic shut-off of

ventilation during a fire,

and the smoke removal

system.

HARRY NORDQVIST

[email protected]

The overheated components can be easily and reliably detected by IR scanning.


regular intervals by skilled technicians.Testing may include infra-red scan-

ning. A Dutch study has revealed that, on average, every company has some 5 fire-hazardous situations in its electrical installation.

We support the acquisition of own IR cameras and training of in-house techni-cians in the interpretation of results for the following additional reasons:

Electrical maintenance – Gives the electrician the ability to check new in-stallation or replacement electrical parts, such as switches, contacts, etc, on an ongoing basis, and allows hands-on checks without the need to wait for the next third-party inspection date.

Mechanical maintenance – When me-chanical parts wear or otherwise mal-function, the resulting friction will re-

lease heat energy, so IR scans can also indicate imminent problems in, e.g. mo-tors, gearboxes, belt-drives, or hydraulic units.

One of my clients discovered a seri-ous brake malfunction on an overhead travelling crane. Without the IR camera it would only have been detected after a complete breakdown.

Fire watch – To assist the fire-watch af-ter performance of hot work. Here an IR camera can be used about two hours after normal inspection times. The area should be scanned as a final check.

Tip 2: Maintenance

Evaluate maintenance of all hydraulic equipment, including hoses, lines, and fittings. Most breaks occur in lines, of-ten at the fittings.

The common belief is that hydraulic

fluids do not create a fire hazard because they have such a high flash point. This is true but, in reality, the heat of combus-tion of a typical hydraulic fluid is identi-cal to that of gasoline:Hydraulic fluid 46.5 MJ/kgGasoline 46.5 MJ/kg

Add the fact that hydraulic fluid is con-tained in a closed and highly pressurised system, and the problem becomes clear. In the event of a leak, these oils can cre-ate an atomised mist which can spray up to 15 m from the rupture point, and can be easily ignited despite the higher flash point. Atomisation of the fluid greatly increases the ease of ignition. Once ig-nited, this mist forms a fireball that will burn with great intensity until the flow of oil is stopped.

The best facilities combine excellent maintenance programs with regular oil

removal and other housekeeping activi-ties to achieve safe standards of operation. Not only does this greatly improve loss prevention, but it also makes for a much more pleasant working environment.

A means of automatic or manual shutdown of hydraulic pumps and pres-sure relief should also be provided.

Tip 3: Outdoor housekeeping

Good housekeeping is as important out of doors as it is inside homes and indus-trial buildings. Inadequate housekeeping may threaten the fire security of exposed structures and items stored out of doors. Accumulation of rubbish and waste adja-cent to buildings or stored items is prob-ably the most common hazard.

Again, a recent catastrophic fire showed that the storage of combustible waste near any facility is extremely inad-visable.

To prevent the spread of fire, organi-sations should locate storage areas at ad-equate distances from buildings of com-bustible construction, or from other combustible storage.

Housekeeping should focus on main-taining these separations by prohibiting even the temporary introduction of items such as contractors’ shacks, discarded crates, idle pallets, or other combusti-bles. Proper housekeeping also requires prohibiting smoking in areas of outdoor storage. The organisation should provide suitable warning signs and non-combus-tible receptacles for the disposal of smok-ing materials before entering a ‘no smok-ing’ area.

When combustible materials from in-dustrial operations have to be stored out of doors until disposal, the organisation should locate the storage area at least 10 m from buildings. They should also be

at least 10 m from public highways and sources of ignition such as incinerators. Closed steel containers should be used, or the area should be enclosed by a se-cure non-combustible fence of adequate height.

Loss prevention, therefore, is essen-tial for me, and it should be essential for everybody. This is nothing new or com-plicated, just something to be kept in mind and lived by. Catastrophes can be prevented! •

Excellent

MAK OLIEMAN

[email protected]

POOR POORPOOR

EXCELLENTEXCELLENTEXCELLENT

Keep your waste at a safe distance from buildings, preferably in metal containers.

Piles of wood pallets should always be kept far away from the buildings.

Poor housekeeping indicates poor maintenance; a disaster waiting to happen.


Sprinklers are relatively low-tech systems so that there is little risk of technical problems with com-

ponents. When the sprinkler head opens, water is released. From a statistical point of view, this provides a high degree of functional reliability in the installation.

Nevertheless, we have found defi-ciencies in some cases. What are the most important causes, and what do in-surance companies, on the basis of their wide experience with many major cas-es of fire damage, regard as the greatest challenges?

Ensure your sprinkler installation

WORKS PROPERLYBasic deficiency: missing documentation

To be certain that the sprinkler instal-lation is adequate for controlling a fire, the owner has to maintain all documen-tation regarding e.g. the design criteria and acceptance testing. It is common to believe that the installation is a complete extinguishing installation, but when there is no available documentation on the system, one cannot know whether the installation has critical defects. Insur-ance companies in Norway require that sprinkler installations should be docu-mented via an inspection report from an FG-approved (FG = The Norwegian Insurance Approval Board) inspection company, and that the report is entered in the ESS web database. Many sprin-kler installations in Norway are not doc-

umented in this way, and our task is to set sprinkler installation documentation requirements for customers. Both the owners and ourselves will then discover any deficiencies in the installation, and can make the necessary improvements.

Check-points regarding sprinkler installations

When inspecting the sprinkler instal-lations in Norway, we have noted that weaknesses are often to be found related to the following items.

Inadequate water supply. When de-signing a sprinkler installation, checks should be made to determine wheth-er sufficient water will be available from the public mains, or whether it will be necessary to construct an on-site tank

with pumps. This is an area where there is often a design fault, with the installa-tion being constructed on the assump-tion that the municipal water mains will be able to provide an adequate supply. But the main task of a water company is to provide drinking water to its cus-tomers, and it may place restrictions on carrying out flow tests, which is one of the factors that should be verified dur-ing the annual inspection of a sprinkler system. Another factor that is difficult to check is booster pumps. In cases where the mains can supply sufficient water, but where a booster pump has to be fit-ted ahead of the sprinkler valve, it is dif-ficult to carry out the necessary test-running of the pumps. There will then be considerable uncertainties regarding function in the event of fire.

Sprinkler installation incorrectly de-signed for the level of risk it must face. There may be changes of use which need increased extinguishing capacity, e.g. if a production site becomes a storage unit, or if goods with a higher fire risk, with increased content of plastic materi-als or packaging, are stored. Warehous-es or shopping centres present more of a storage risk (HHS) than an older shop (OH3), as it is referred to in the official regulations.

Excessive material stored in relation to the sprinkler’s extinguishing capac-ity. The owner of a storage building who wishes to make maximum use of stor-age capacity may pile material up to ceil-ing height. This can lead to restriction of the sprinkler head spray pattern. For OH installations there should be at least 50 cm from the sprinkler to the top of the stored material, and in high-hazard oc-cupancies (HHS), for instance in storage areas, the clearance should be 100 cm.

Sprinklers vs. smoke ventilation. An-other factor that can reduce sprinkler in-stallation function is smoke ventilation where fans or openings in the walls and

ceiling are provided to lead away smoke from a fire to improve the working envi-ronment of fire and rescue personnel. If smoke ventilators are started up before the sprinkler installation, it is possible for hot smoke from the fire to be drawn away from the fire initiation point and start up sprinklers in areas outside the actual fire zone. Smoke spreading from the fire zone will be cooled, but the fire itself will not be affected.

Supervise your sprinkler installations carefully

Because of factors such as described above, sprinkler installations should al-ways be delivered with a test, service, and maintenance programme which has to be followed by the owner or user of the in-stallation. Legislation varies from coun-try to country. In Norway, it is required by law that the owner of a building must ensure that the installation functions in the manner for which it is intended. Part of this obligation includes an annual in-spection of the sprinkler installation by qualified persons. In insurance agree-ments this is also often included as a re-quirement in safety regulations.

The detailed inspection and mainte-

When you need to temporarily disconnect your sprinkler system, be sure to plan this carefully by using the form developed by If (see p. 29). For further information, please contact your client team.

nance programme also covers frequent inspection patrols from the business side. Pressure checks should be made, as well as visual inspections of sprinkler branches, shut-off valves, and alarm tests at weekly, monthly, quarterly, and half-yearly inter-vals. Logbooks should be kept to ensure that these inspections are carried out.

Sprinklers are cost-effective fire protection

Insurance companies, as well as national building regulations in each country, set requirements for that sprinklers should be installed in certain types of businesses or buildings over a certain size. It may be a storage or production facility with very high fire loading, storage of flam-mable materials, or also buildings where there is an enhanced danger to life and health. Also, some businesses have car-ried out risk analyses indicating a need to secure activities with an automatic ex-tinguishing system. There are many ex-amples where companies suffering major damage will experience a long downtime that makes it difficult to get back to the market position they have built up over time, and by then competitors may have taken over market share.

On the basis of experience, we know that sprinkler installations are often re-garded as major cost items in both new and existing buildings. However, in terms of write-off over time, the costs of a sprinkler are not great in comparison to total building costs. Also, if it is pos-sible to make a rapid return to full op-eration and regain market position, the costs of a sprinkler system will often be a relatively small price to pay.

In conclusion, we again stress the im-portance of checks and inspections, and cannot over-emphasise that inadequate supervision and documentation can in the worst case have consequences in a settle-ment after fire damage, if it is found that general deficiencies which could have been exposed were significant factors in terms of the extent of the damage. •

Sprinklers are automatic

extinguishing systems with

the greatest reliability and

damage-limitation effect on a fire.

Installing a sprinkler system is like

having a fire-fighter for every

10 m² with a fire hose ready

24 hours a day.

AN

DER

S R

ØRV

IK E

LLIN

GBØ

TORE AARNES

[email protected]

ANDERS RØRVIK-ELLINGBØ

[email protected]


A threatening fire that did not affect production

In the early hours of a beautiful summer morning on 7 July 2010,

the Emergency Response Centre (ERC) of South East Finland

received an emergency call regarding a

fire in a boiler unit’s fuel silo.

The location was the Honkalahti sawmill, which forms part of Sto-ra Enso’s Wood Products busi-

ness area. The silo’s sprinkler system had activated at 5.41 a.m. The ERC imme-diately dispatched 10 firefighting units, from both the public fire department and contractual and industrial fire bri-gades. With several large wood process-ing plants located in the area, it was im-portant to keep one fire brigade on call in case of other incidents.

At a height of approximately 20–40 metres, the fire was difficult to reach. The outer walls on the upper parts of the boiler plant and of a fuel conveyor were ablaze. Requiring the use of a hy-draulic platform truck, extinguishing the fire proved challenging. Furthermore, firemen had to tear off sheet metal pan-els from the walls, in order to extinguish fire pockets smouldering in the insula-tion and prevent the fire from spreading. However, the fire was rapidly and effec-tively extinguished thanks to the efficient firefighting of the various brigades, the contribution and guidance provided by the sawmill’s own fire brigade, and the well-functioning sprinkler system.

Although the fire was located near the top of the fuel silo, it was prevented from spreading to the space above the silo by three sprinkler heads. Further-more, three other sprinkler heads situat-ed in the adjacent maintenance facilities played a major role in halting the spread of the fire. Another key instrument ap-plied during the extinguishing proc-ess was an infrared camera. The fire had

spread to the boiler hall ceiling, which was covered with panels made of ce-ment and wood wool. By using the in-frared camera, the fire-fighters were able to spot fire pockets invisible to the na-ked eye.

The location of the fire was criti-cal. Normally, the wind blows from Lake Saimaa towards the factory ar-ea, which could have caused the fire to spread from the boiler plant to the saw-mill building and beyond towards the further processing plant. Fortunately, there was practically no wind when the fire broke out. Furthermore, the risk of fire had been identified in good time, the risk reports drawn up by If P&C Insurance recommending that the fu-el silo and conveyor be protected with a sprinkler system. Installed at the end of 2009, the sprinkler system covered the entire length of the conveyor as well as the upper part of the boiler plant. A well-functioning sprinkler system played a key role in the early stages of the fire, since it was the only way to prevent the fire from spreading. According to the fire department, the sprinkler system was vital to the successful outcome.

The fire was probably caused by the 230-volt power cables situated on top of the fuel conveyor or the electricity distri-bution box they require. The fire dam-aged the fuel feed conveyor, power ca-bles, a few electric appliances, some in-ternal wooden structures and approx-imately 80 m2 of the exterior wall panelling on top of the building. Fur-thermore, the firefighting work caused

some water damage. The damage caused by the fire was repaired during the sum-mer downtime, which began a week af-ter the fire.

The boiler plant forms a critical part of the production process, being used to generate heat for the drying plants that operate at full capacity. Since the boil-er was shut down as soon as the fire was discovered, it suffered no damage. As early as in the afternoon of the day of fire, the power station was restarted with natural gas, which continued until the fire damage had been repaired. The sawmill was stopped for the duration of the fire, but restarted immediately after-wards.

This fire once again demonstrated that an industrial fire brigade, sufficient firefighting capacity, and sprinkler sys-tems play key roles in the prevention of large fires. •

ARI SANTAVUORI

[email protected]

I SA

NTA

VU

OR

I

AR

I SA

NTA

VU

OR

I



At the moment it seems as though the effects of the financial

crisis are gradually decreasing and thus the world may have

passed the extreme low of the V-curve. When the upturn comes,

production capacity will once again be fully utilised. This might

be a challenge from the loss prevention point of view and might

in the worst case lead to an increase in losses. The first and most fundamental process that any business should initiate in a time of crisis should

be a review of its overall strategy. Often, a basic analysis will identify the need for change in the way this business is cur-rently being run, in which case it is nec-essary to seize the opportunity now. The financial crisis has freed up human re-sources that can be used to plan and set in motion new smart solutions. Even rel-atively small, simple actions can put the business in a better condition to take ad-vantage in a period of growth and have significant potential for profitability.

We will now look a little more closely at how a business can set such a process in motion, especially from the loss pre-vention point of view.

Develop your management processes

All businesses have one or more man-agement systems, even though they have not always been certified accord-ing to ISO standard requirements. Of-ten it can be seen that a management system is only partly implemented, while unauthorised, old procedures and rou-tines continue to be used in parts of the business. We believe that there are rea-sons to bear in mind that a good, robust management system is not only a useful tool, but is also suitable for use under all conditions. Thus, businesses should push for further development and im-provement of their systems and work to-wards full implementation of them.

Update your risk analyses

Updating risk analyses is an important part of a business’s risk management programme. Risk analysis is a useful way of organising all the types of risks that

may affect the business. It is also usual that authorities require businesses to car-ry out risk analyses covering health, safe-ty and environmental issues. Risk anal-yses can make a useful contribution to prioritising actions in a situation with scarce resources. A considerable number of risk-analysis methodologies have been developed, ranging from basic qualitative methods to relatively advanced mathe-matical models. We think that a qualita-tive/semi-quantitative, coarse model will be adequate in most cases. One person should be made responsible for updating risk analyses, but it is important to bear in mind that risk analysis itself should not be the work of a single person; the analysis should draw upon the collective experience of the business.

Strengthen your maintenance systems

Today, large businesses have IT-based maintenance systems that control the various maintenance activities. These can always be developed further. Ba-sic analysis can often improve safety and reduce the risk of unplanned pro-duction stops while simultaneously en-suring better financial results over time. These analyses may be based on experi-ence, statistics, or mathematical mod-els, and they can be very demanding in terms of time, so it is wise to implement them in periods when business is slack. Of course, inspection and preventive maintenance of production facilities are also central elements in being fully pre-pared for the upturn.

Focus on chemicals

A concrete example of good use of a business’s resources at a time when ac-cess to resources is difficult is the use and

handling of chemicals. The REACH*) Directive which came into force in 2008 introduces something new in official reg-ulations regarding chemicals. Business-es may use quiet periods to go through and rationalise their work with chemi-cals by carrying out a total inventory of the number of types of chemicals per di-vision, removing chemicals that are no longer used, or chemicals with the same or similar function as other chemicals, and creating divisional material safety da-ta sheets libraries on paper or preferably by using IT solutions. A survey of this type will provide a good basis for pro-posing substitution of hazardous chem-icals by others with less hazardous ef-fects on health and the environment. Al-so, for many businesses, the number of chemicals in use is significantly greater than one would believe, and rationalisa-tion can consequently be very profitable. A thorough review also provides a great opportunity for establishing well-control-led purchasing routines with one or more suppliers, which can generate good dis-counts and reduce transport costs.

We hope this discussion has provid-ed inspiration to look ahead and think long-term, even if now is not a good time for many businesses. And, no mat-ter what happens, we in If will always be ready to help our customers when acci-dents happen and damage is a reality. •

*)REACH (Registration, Evaluation and Authori-

sation of Chemicals) – the EU’s new set of regulations

on chemical management

Loss prevention strategies in a

RECESSION

PER ÅGE BECK

[email protected]


SHU

TTER

STO

CK

SHUTT

ERST

OCK

ACCIDENT RISKSand safety management in maintenance

Organising maintenance

nowadays is not quite the same

as it used to be. In the past, most

of the maintenance was done by

the workers themselves, or by a

company’s own maintenance staff

employed to keep the machines

running.

there are around 3,000 companies in the maintenance business. Continuous improvement in the maintenance sec-tor has been made, especially regard-ing client-supplier co-operation. Prin-ciples of this co-operation are includ-ed in the new Health and Safety legisla-tion, and good practices like the Occu-pational Safety Training Card have been standardised. This year, EU-OSHA, the European Agency for Health and Safety at Work launched a Healthy Workplace campaign for safe maintenance togeth-er with companies and associations from the private and public sectors in Europe.

Accident patterns and risk profiles

In contrast to normal production work in the industrial environment, mainte-nance has special attributes that increase the risk of accidents. The work is typi-cally carried out very close to or even in-side complex machines and processes.

Time is normally limited, and the surrounding environment might be un-familiar to the worker. It includes high-

risk operations like hot work, use of cranes, man-lifts and scaffolding, and also work in confined spaces such as tanks. Also, maintenance work often in-cludes a considerable amount of manual work, sometimes with poor ergonomics and heavy physical strain.

As an insurance company, If holds very comprehensive claims statistics of occupational accidents. Based on these statistics from the industrial client base, the accident frequency in maintenance has been continuously decreasing in re-cent years. Despite this, the accident frequency in maintenance is still clearly higher than industrial work on average. When looking at single industries, main-tenance has the highest accident rates in the metal, forest, chemical and food in-dustry (figure 1).

A typical accident in maintenance is a hand injury caused by loss of control of a hand tool or equipment. Foot and leg injuries are also quite common, and they often lead to long periods of sick leave. Eye injuries are typical as well, but the se-

riousness of these accidents is not nor-mally very high. The profile of fatal and very serious accidents is quite differ-ent from that of minor ones. A more se-rious accident is in many cases caused by a moving machine part, falling from height, explosion, fire, electricity, or work in confined spaces. According to a recent study, about one third of serious and fa-tal injuries in maintenance occurred while work was done with machinery running or electricity switched on.

Safety management – recent trends and focus areas

Many companies have already awakened to the need for systematic safety man-agement which also takes the safety of the subcontractors into account. There are some very widely-used tools to in-crease the safety in shared workplac-es and improve co-operation between a company and its subcontractors. These tools have gained best-practice status because they work for employees as well as for subcontractors.

More recently, large enterpris-es have outsourced and de-merged at least parts of their

own maintenance divisions with increas-ing frequency. This has aroused a need for new procedures for effective client-supplier co-operation. The purpose of maintenance management is to optimise the utilisation of assets and reduce costs. Occupational health and safety has a key role in achieving these goals.

Avoiding occupational accidents ben-efits both client and supplier. It has been estimated that 15 – 20% of all occupa-tional accidents are maintenance relat-ed. In Finland this would mean around 20,000 accidents per year. In addi-tion to human losses, these accidents cause huge costs to companies, not on-ly because of higher worker compensa-tion premiums, but also because of indi-rect costs caused by e.g. delayed mainte-nance, property damage, business inter-ruptions, and increased labour costs.

In Finland, industrial maintenance employs around 50,000 people and

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GENERATIVESafety is how we do business

round here

PROACTIVEWe work on the problems that

we still find

CALCULATIVEWe have systems in place to

manage all hazards

REACTIVEsafety is important, we do a lot every

time we have an accident

PATHOLOGICALWho cares as long as were

not caught

Increasinginformedness

Increasingtrust

Figure 1. Accident frequencies in industrial maintenance and industrial work on average

causing absence for more than three days (If Industrial client base)

50

45

40

35

30

25

20

15

10

5

0

Accident frequency

1999 2000

Industrial maintenance Industrial work on the average

2001 2002 2003 2004 2005 2006 2007 2008

tenance work. In other words, correct ‘logout-tagout’ procedure is a corner-stone of safe maintenance work.

It is often a matter of safety attitudes whether preparatory cautions are prop-erly carried out. Another European safe-ty campaign ‘Hearts & Minds’ promotes these behavioural aspects of mainte-nance activities. Hans van Selm, mem-ber of the board of Dutch Maintenance Society describes ‘Hearts & Minds’ as influencing behaviour and awareness re-garding safety. The purpose of this cam-paign is to increase awareness of the im-portance of commitment in trying to achieve the highest steps in the safety cultural ladder (figure 2). This commit-ment must extend throughout the or-ganisation for a positive safety culture to

Figure 2.

The evolution of safety culture (Hudson)

exist. It also means visible involvement in safety, starting from top management and influencing behaviour, especially from middle managers and supervisors.

More attention to attitudes and communication

Its clear that including maintenance, whether outsourced or not, into a safety management system increases the safe-ty of a shared workplace. However, an important factor for effectiveness is that communication on safety between client and subcontractors works both ways. For example, in the case of outsourced maintenance, responsibility on safety is temporarily ‘given’ to another compa-ny. Without communication neither one can be sure whether or not safety is en-

KARI HÄKKINEN

[email protected]

VILLE NIEMELÄ

[email protected]

EU-OSHA Healthy Workplaces campaign webpage: http://osha.europa.eu/en/cam-paigns/hw2010/

Lind, Salla: Types and sources of fatal and severe non-fatal accidents in industrial main-tenance. Int. journal of industrial ergonomics 38(2008), p. 927-933

Takala, Jukka: Getting Maintenance Right - the Healthy Workplaces campaign 2010-2011. Maintworld 1/2009, p. 6-8

Van Selm, Hans: Hearts & Minds for Safe Maintenance work. Maintworld 1/2010, p. 40-41

More information:

sured. This is why mutual trust through open communication must be achieved rather than a client only handing out or-ders to subcontractors.

In the recent launch seminar in Hel-sinki of the EU-OSHA campaign for safe maintenance, safety experts and manag-ers from authorities, industry, and insur-ance discussed the present state of safety affairs in maintenance. A review of main-tenance accidents and safety practices in industry was presented by If’s risk man-agement experts. There is a lot of evi-dence that major safety progress can be achieved only by attitude and culture im-provement. “Safety culture is an every-day aspect of our safety management”, commented Mr. Ilkka Palsola, Main-tenance Manager of the Kemira plant in Oulu, Finland, a site that just recent-ly reported its first 1000 consecutive days without an accident. “But we still need a lot of work on attitudes. Mainte-nance people tend to focus on those spe-cial moments when there is a problem at the plant, and they want to charge to the site immediately like the cavalry to solve the problem, without preparation and personal protection. But the valuation of safe working and personal protective equipment has increased, so attitudes are improving”, Ilkka Palsola concluded. •

Operating fire protection sys-tems are important in safe-guarding your property and

business. Therefore, they should not be impaired unless absolutely neces-sary. Disconnection could occur in connection with e.g. construction, installation, repair, disassembly etc. work. When preparing for these oper-ations, the disconnection of fire pro-tection systems should be carefully planned in advance.

In order to help our customers to manage these situations, we have devel-oped an impairment notification form. It is available on our website www.if-insurance.com. The form can be

filled in electronically, saved and printed. We recommend that you use the

form internally. In cases where you need to impair an automatic fire de-tection or sprinkler system or parts of these for a longer period than 24 h, If P&C Insurance should be informed. For this purpose you can simply use the above mentioned form and send it us either by fax or e-mail. The ad-dresses and fax numbers are indicated in the forms. Your client team contact persons are happy to answer any ques-tions regarding the use of the form you might have. •

ANNA MARIA VÄHÄKUOPUS

[email protected]

Plan carefully if you disconnect fire protection systems

If maintenance is outsourced, it nor-mally means that the maintenance staff are working in another company’s facil-ity under the supervision of the client’s foremen. This means that subcontractor personnel have to adapt to the safety at-mosphere of the client company. Nor-mally this is a good thing because large companies have much greater resources for their safety operations and are often more aware of the importance of health and safety. This is why many industri-al companies take the safety manage-ment system of the supplier into account when they select their subcontractors. If a company is committed to ‘Safety First’ – thinking, it is obvious that they want to commit their subcontractors to the same philosophy.

An effective and widely-used tool to distribute safety information in work-places is Toolbox safety talks. In Tool-box talks, the supervisor holds an un-official meeting, or rather a conversa-tion, with his workers where timely safe-ty matters are discussed. Toolbox talks are a good channel for distributing in-formation for example about recent ac-cidents, including prevention methods or new safety regulations. In these meet-ings, workers can also address their safe-ty concerns and inform about poten-tial safety hazards. For the Toolbox talks to be effective, they must be short (~15 min), unofficial by nature, and open for debate. The topics for Toolbox talks can come from the client or from inside the own company. There is no limit on how often these discussions can be held; what is important is that the topic is relevant.

In maintenance, the supervisors and especially the workers themselves have a great responsibility for keeping work safe. In addition to large maintenance projects where work is well planned and risk analyses have been carried out in advance, maintenance includes a lot of small operations performed in case of malfunction. It is quite rare for these tasks to be planned before taking action.

To be reasonable, it is not necessary to make an extensive risk analysis for a small task, but simple actions like go-ing through an adequate checklist be-fore the work to ensure safety decrease risk significantly.

One key factor is to separate the ob-ject of maintenance from all sources of energy with lockable devices, and to en-sure that no energy is left in the ma-chine. This effectively prevents unex-pected movement of the machine, a cause of many fatal accidents in main-



AppointmentsNews

Sirpa Peura

New Nordic Head of Employee

Benefit Underwriting Industrial

Sirpa has been responsible for

Employee Benefit Finland.

Janina Helenius-Bylander

New Risk Engineer in Sweden

Janina has been working within

Commercial UW Property as

Underwriter and Risk Engineer.

Tore Dunersjö

New Risk Engineer in Sweden

Tore has been working as

Large Claim handler.

Mikael Kärrsten

New Nordic Head of Motor

Underwriting Industrial

Mikael has been responsible

for Employee Benefit

Sweden.

Elisabeth Myklebost

New Marine Underwriter in

Norway

Elisabeth has worked as a

broker for on- and offshore

energy in Oslo and London.

Mirva Paavola

New Head of Employee

Benefit Underwriting, Finland

Mirva comes from Tapiola

where she has been working

as development manager.

Merli Romell

New Head of Marketing

Industrial

Merli comes from a position

as Marketing Director for the

Nordic branch of an American

B2B event company called

IQPC.

Håkan Storm

New Account Executive,

Industrial Sweden

Håkan comes from Marsh

where he has worked as both

broker and risk engineer.

Stefan Othman

New Account Executive,

Industrial Finland

Stefan has been working as

Motor underwriter.


As the new Nordic Head of Claims

at If, 51 year old Klaus Vogel will

be responsible for the handling of

close to 300 000 insurance claims

and settlements a year, with a total

value of approx. 10 billion SEK.

Klaus Vogel from Denmark took over as Head of Claims in May. He follows in the footsteps of

Tommy Almgren who has led the 700 man strong Nordic organization since the beginning of the century.

Congratulations on your new job! – Thank you!

You will be head of a business unit where one single large claim can cost several hundred millions. This is a heavy responsibility – how does this feel?

– It is with great respect for the chal-lenges that I take over.

– But also with calm and confidence. Of course it is about important deci-sions and also large amounts. But If has an enormous experience with all claims imaginable, both in the Nordic coun-tries and internationally. We are profes-sionals in this area and are proud of our claims handling.What is the strength of If’s claims handling?

– We have a common Nordic claims unit with an enormous competence. In addition we have a very experienced If-Team of international claims experts working in close cooperation with our external network of partners. We have a long experience of working togeth-er with our clients, both local and glo-bal businesses.

What will be your priority in your new role for the coming years?

– The vision for If’s claims handling is to be the specialist who takes proactive care of the client’s claims without delay.

– That being said, we are also striv-ing to develop the organization, in close step with the clients need, techno-logical developments, etc. In the com-ing years we will see that smaller and less complex claims will begin to be

handled automatically. This will give the clients a fast and efficient claims handling, and at the same time we can concentrate our resources on the more complex claims.

If’s claims handling has a good rep-utation in the market. But once in a while, one would assume, there are conflicts with clients?

– It is not common, but it cannot be totally avoided either when we are work-ing in such a complex business area as insurance. It is actually healthy that the clients argue their case and viewpoints if they are not satisfied. It strengthens and develops us as a business.

The new Head in Industrial and Commercial Claims

New capabilities in Brazil

We are pleased to inform you about the latest develop-ments of our capabilities in

Brazil.If P&C Insurance has been approved

as eventual reinsurer in Brazil by SUSEP (the Brazilian insurance regulator) which gives If the right to reinsure Bra-zilian insurance risks.

A fronting agreement with an al-ready well established partner to If has also been set up. The registration of If in Brazil and the new fronting arrange-ment will give If the possibility to in-clude Brazilian operations of our clients in to the global insurance programs. •

SOFIA ERIKSSON

If is spotlighting your business ar-ea in its marketing with ”Claims han-dling the way it should be” as the theme. What do you think of this?

– It is a challenge for us to be spot-lighted in the marketing – but it is a campaign which we do enjoy. We do think ourselves that we deliver a very good claims handling with a high level of competence and service.

You have been in the insurance busi-ness for quite some years.

– Yes, I started out when I was 17 with an insurer, and this has formed all of my adult life.

– As opposed to most of my col-leagues at the same managerial level, I do not have any college background. I have been educated within the business and have a broad practical background. It gives me a good overview, and it keeps me down-to-earth.

Good luck!– Thank you. •

ULF BÄCKMAN

LOUISE GLØET

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SWEDENIf P&C InsuranceS-106 80 StockholmVisit: Barks väg 15tel. +46 (0)771 43 00 00 fax. +46 (0)8 568 859 59fi [email protected]

If P&C InsuranceVikingsgatan 4S-405 36 Gothenburgtel. +46 (0)771 43 00 00fax. +46 (0)31 34 564 10fi [email protected]

If P&C InsuranceVästra Varvsgatan 19S-211 19 Malmötel. +46 (0)771 43 00 00 fax. +46 (0)40 14 80 20fi [email protected]

If P&C InsuranceBox 190S-851 03 SundsvallVisit: Universitetsallén 2tel. +46 (0)771 43 00 00fax. +46 (0)60 18 50 11fi [email protected]

FINLANDIf P&C InsuranceFIN-00025 IFVisit: Vattuniemenkuja 8 A Helsinkitel. +35 8 10 515 10fax. +35 8 10 514 4028fi [email protected]

NORWAYIf P&C InsuranceP.O. Box 240N-1326 LysakerVisit: Lysaker Torg 35tel. +47 98 00 24 00fax. +47 67 84 02 60fi [email protected]

If Safety CentreRingvollN-1827 Hobøltel. +47 69 92 06 00fax. +47 69 92 06 [email protected]

DENMARKIf P&C InsuranceStamholmen 159DK-2650 Hvidovretel. +45 36 87 42 80fax. +45 36 87 48 65fi [email protected]

FRANCE AND LUXEMBOURGIf Assurances France4, rue Cambon, 2e étageF-75001 Paristel. +33 1 42 86 00 64fax. +33 1 42 86 09 76fi [email protected]

GERMANYIf Schadenversicherung AGDirektion für DeutschlandSiemensstrasse 9D-63263 Neu-Isenburg tel. +49 6102 710 70fax. +49 6102 710 771fi [email protected]

THE NETHERLANDS AND

BELGIUM

If P&C InsuranceBoompjes 413NL-3011 XZ Rotterdamtel. +31 10 201 00 50fax. +31 10 413 77 99fi [email protected]

GREAT BRITAINIf P&C Insurance2nd fl oor, 40 Lime StreetLondon EC3M 7AWtel. +44 20 7984 7600fax. +44 20 7984 7629fi [email protected]

USA AND CANADALiberty Mutual GroupLiberty Global175 Berkeley StreetBoston, MA 02117tel. +1 617 654 4940fax. +1 617 574 [email protected]

ESTONIAAS If Eesti KindlustusPronksi 19EE-10124 Tallinntel. +372 6 671 100fax. +372 6 671 101fi [email protected]

LATVIAAS If LatviaKronvalda bulvaris 3LV-1010 Rigatel. +371 7 094 777fax. +371 7 094 701fi [email protected]

LITHUANIAUAB If DraudimasZalgirio 88LT-09303 Vilniustel. +370 5 210 9800fax. + 370 5 263 6056fi [email protected]

RUSSIAIf St.Petersburg Representative Offi ceP.O.Box 16, FIN-53501 LappeenrantaVisit: Malaya Konyushennaya 1/3, offi ce B 42191186 St.Petersburg, Russiatel. +7 812 329 2540fax. +7 812 329 [email protected]

Relax, we’ll help you.

.............................................................................................




FINLANDIf P&C InsuranceFI-00025 IFVisit: Niittyportti 4 Espootel. +358 10 19 15 15fax. +358 10 514 4028fi [email protected]




FRANCE AND LUXEMBOURG If Assurances France 4, rue Cambon, 2e étage F-75001 Paris tel. +33 1 42 86 00 64 fax. +33 1 42 86 09 [email protected]


THE NETHERLANDS AND

BELGIUM


GREAT BRITAINIf P&C InsuranceAlpha House, 3rd Floor,

London EC3M 7HJtel. +44 20 7984 7600fax. +44 20 7984 7629fi [email protected]

24a Lime Street

ESTONIAIf P&C Insurance AS Pronksi 19EE-10124 Tallinntel. +372 6 671 100fax. +372 6 671 101fi [email protected]

LATVIAIf P&C Insurance AS Latvijas filiale Mûkusalas 101LV-1004 Rigatel. +371 7 094 777fax. +371 7 094 701fi [email protected]

LITHUANIAIf P&C Insurance AS filialasZalgirio 88LT-09303 Vilniustel. +370 5 210 9800fax. + 370 5 263 6056fi [email protected]

RUSSIAIf InsuranceP.O.Box 16, FI-53501 LappeenrantaVisit: Dobrolyubova pr., 16A, building 2, 197198 St. Petersburgtel. + 7 812 313 51 46 fax. + 7 812 313 51 [email protected]



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THE NETHERLANDS AND

BELGIUM




24a Lime Street







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THE NETHERLANDS AND

BELGIUM




24a Lime Street







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