These are intangible losses and this example is based on a property that had been surveyed. Loss of Investor Confidence: Poor risk mitigation and contingency planning can result in a higher cost of capital, amounting to a £65 million loss.Loss of Growth: A 24-month rebuild period may cost the company £240 million in missed growth opportunities.Customer Loss: Protracted business disruption could cost the corporation £145 million.However, with uninsured losses, the company calculated that they could lose a further £450m from its market value as follows: Uninsured losses can also include lost customers, forfeited growth, and loss of investor confidence, which can collectively be much more significant, often amounting to 4x-5x the insured losses.īy way of a case study, a client is considering investing £1m in flood defences to defend property insured to the value of £190m. Insured losses, such as physical damage or business interruption, are only part of the equation when considering the total loss suffered after an event. Uninsured losses can mean those risks not insured at all or losses falling within the insurance retention. This 24/7 risk assessment will take into account both insured and uninsured losses. uninsured lossesĪ comprehensive approach to assessing risk and mitigating losses should therefore involve using IoT devices due to the 24/7 monitoring alongside providing alerts to changing situations based on a set of predefined rules. Based on industry research, this is a very real blocker for the adoption of IoT because building owner/ managers may not wish to have another set of corrective measures and investments to make. However, does this also mean that there will also be an average of 7 risk recommendations for each building where IoT is deployed and what is the ROI for each? Or indeed, by not deploying IoT, those risk issues are unseen and therefore, there is no obvious or documented risk remediation. Simply by putting IoT devices in a building, 100% of those buildings can be more effectively risk assessed leading to increased data for the purchase of insurance. The Risk Consultant typically only visits one or two days per year and can only observe that day’s situation and events. IoT devices and real-time data can run 24/7 observing via (say) a building management system and what is happening with heating, cooling, humidity, power and water usage and so on. Of those risk recommendations, only 1 of those 7 on average is addressed. On average the industry norm is that 1 in 10 properties are surveyed in this way with an average of 7 risk improvement recommendations. In the world of commercial property and insurance, the traditional risk assessment method has been that a human being visits a site once a year (or possibly longer) with a clipboard manually recording issues and required risk improvements.
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