Commercial Asset Owners Need Broader Risk Strategy
Commercial property insurer FM Global CFO and Executive VP Kevin Ingram says neglecting idle facilities amid COVID-19 will cost companies dearly.
As distracted corporate executives close offices, plants and warehouses to reduce COVID-19 spread, other worrisome risks are emerging at these now-idle facilities, warns US-based FM Global Chief Financial Officer Kevin Ingram.
According to Ingram, in addition to fires, vandalism and theft, spring flood season is beginning in the U.S., and hurricane season starts in a mere two months, leaving understaffed facilities potentially vulnerable. Additionally, earthquakes and tornadoes have continued to occur during the pandemic, as the U.S. has seen recently.
“Any of these events could delay a company’s rebound when the pandemic wanes, causing irreparable financial harm such as lost revenue, market share and reputational damage. Countless companies across many industries have paused operations around the world in what has been billed as the biggest factory shutdown since World War II, and more closings are expected,” says Ingram.
Ingram claims losses at idle properties are preventable and recommends companies ensure the following needs are addressed, while prioritizing employee health and safety, to help protect their facilities as the crisis unfolds:
Contact authorities and explain that security and maintenance personnel on your site are “essential” in the context of stay-at-home orders.
Maintain staff to perform regular daily rounds inside and outside idle facilities. Watch for criminal activity, smoke, fire or property damage. Consider webcams and sensors to detect out-of-theordinary motion, heat or water flow.
It’s important to keep fire protection in place. Have maintenance staff check daily to ensure sprinkler valves are locked open. Remove debris and ignitable liquids, and closely monitor any welding or other “hot work” taking place on the property. Alert the local fire department of the building’s change in use.
Water damage, among the biggest threats to commercial and industrial property, is a growing risk as sea levels and population density rise. Elevate equipment and equip your property with temporary or permanent flood barriers.
This is an ideal time to perform overdue maintenance, whether it’s repairing expensive machinery or fixing a small roof leak that, if untreated, could delay your reopening and return to profitability.
According to Ingram, it is human nature to focus on the most sensational risk, however, commercial asset owners need to be mindful of a broader risk strategy.
“In this case, a terrible one is commanding attention around the globe, yet it’s important to remember that other serious risks haven’t gone away and continue to affect organizations’ resilience. Firms that stay vigilant are more likely to be the winners that get back to business at the earliest opportunity,” says Ingram.
(Ed. FM Global is a US-based mutual insurance company dedicated to property risk management and client resilience. It claims to be one of the world’s largest commercial property insurers, whose clients include one of every three Fortune 1000 companies.)