Pilko & Associates brings quarterly industry insights to Energy and Chemical leaders who are responsible for managing and mitigating Operational/EHS Risks.
Jim Pierce, Chairman of Global Energy and Power at Marsh JLT Specialty (Bio),provided the following insights on current insurance trends:
Underwriters have reduced capacity to insure Refining and Petrochemical companies for major incidents as a result of major losses in these sectors globally since 2016. The Midstream sector is also feeling the similar, but not as severe, pressures.
The net result is that Corporate Officers and Boards will have greater incentives to aggressively manage Operational/EHS Risks in order to reduce the probability of catastrophic incidents.
Focusing on Catastrophic Risks have become a key component of overall Enterprise Risk Management (ERM) for several reasons:
In the energy and chemical industries, Operational/EHS Risks are clearly Mission Critical, yet companies have a false sense of security given that they have:
a) Management Systems,
b) Detailed Compliance Audits, and
c) Policies, Procedures and Practices aimed at Safe and Reliable Operations.
Too often energy and chemical companies overlook: