Magazine article Risk Management

Loss Control Technologies: Diverse Research and Testing Serves Business and Industry

Magazine article Risk Management

Loss Control Technologies: Diverse Research and Testing Serves Business and Industry

Article excerpt

In today's business and industrial environment, change is the name of the game. Products change. Processes change. Components change. Materials change. Facilities change. Change can be so large that it is immediately noticed or so small that it easily escapes attention. That's why management of this change through continuous research and testing is important. Research and testing are activities that often start at the plant level to prevent an incident from happening or to understand how one occurred to make sure it doesn't happen again.

As companies, processes and equipment change, risk managers must consider new safety implications. For example, as the result of more demanding building and fire codes, many commercial, industrial and institutional facilities in the United States qualify as highly protected risk (HPR) properties. These buildings are of substantial construction in good repair, have the availability of a good water supply for firefighting purposes, are equipped with sprinklers and other fixed fire protection systems and have watchmen or electronic surveillance services. Despite the inherent safety features built into these structures, it is still a company's commitment to loss prevention and its desire to protect products and processes not covered by the codes that make one HPR facility a better insurance risk than another.

A proactive approach to loss control technology is truly necessary to optimize its benefits. Following are some of the areas in which research is being conducted and tools are being tested. The goals of these projects are to help conserve not only the productive resources of a specific corporation but also those of business and industry in general.

Start With the Basics: "Is it Broken?"

Equipment overhaul timing is one of the most difficult decisions facility managers face because there is a great reluctance to take well-performing production equipment out of service. In short, "if it ain't broke, don't fix it."

On the other hand, what is the probability the equipment will fail, and what are the consequences if it does? How do you determine when to act? Risk-based methods can help analyze maintenance alternatives by helping people who make maintenance decisions consider both of these elements.

When equipment is shut down for maintenance, the shutdown cost -- as well as the reduced failure risk of the equipment following maintenance -- is exchanged for the risk of doing nothing. In most cases, the negative consequences of doing nothing are much greater than the shutdown costs.

Since failure probability for most equipment increases with time, the low probability of failure associated with an early overhaul will not be reduced significantly. However, the high failure probability associated with a late overhaul, and possibly severe consequences of failure in service, may expose the facility to excess risk.

Risk-based analysis combines the tools of engineering and technology with those of finance to calculate the expected net present value changes for any proposed maintenance activity. Other tools can determine the optimum timing for an inspection or component replacement. In all cases, the results of risk-based analysis are presented in a format that senior management can easily understand and is likely to support.

Flammable Liquids

The Flammable and Combustible Liquids Code published by the National Fire Protection Association was recently revised to include fire protection tables for storing these liquids in warehouses. These tables are based on extensive full-scale fire testing that has been conducted during the past few years. Most storage involving metal containers as well as plastic containers of Class IIIB liquids such as motor oil or vegetable oil are covered by the tables. More flammable liquids in plastic containers are not.

Various groups are now conducting research to extend the tables to other possible protection schemes and types of containers: * A group recently completed testing to develop protection for metal containers of less than 5-gallon capacity using early suppression fast-response sprinkler systems * Another group is meeting to develop a test program for protecting 55-gallon steel drums stored higher than the one- or two-drum-high limit imposed by the existing tables * Others are testing plastic containers of water-miscible liquids (such as alcohols) * Other groups are testing flammable and combustible liquids in intermediate bulk containers, which can be very large and constructed of a variety of materials such as plastics or fiber-board

The information obtained from these tests will have widespread application throughout business and industry. …

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