As the mining industry evolves, the role of the industry insurer has to evolve with it.
Demand for commodities is constantly changing as governments and businesses pursue renewable energy targets. Yet although fossil fuels will eventually play a diminished role in Australian power generation, it will be replaced by the need for cobalt and lithium as the electric vehicle market becomes increasingly important, which the mining industry will need to adapt to.
Regardless of the volume and type of minerals, oils or gas being unearthed, there’s a determination to increase efficiency by implementing new technology and preventing unnecessary loss.
Cost of connectivity
No mining site or company is immune to the risk of financial loss and, with the world growing ever more connected, increased opportunity abroad presents a greater risk to your business at home.
If you want to invest in the security of your own equipment and production line, it’s the role of a loss prevention engineer to ensure the mitigation of loss or destruction.
This engineer should be given site access to identify potential threats to your business. They will then develop tailored recommendations to reduce the risk of loss.
Sharing the journey
Once you’ve acquired a greater handle of the pitfalls, and a broader understanding of the risks both at your own location and those posed through a connected supply chain, it not only safeguards your own future but also the wider industry.
At FM Global, the mutual insurance company, its expert engineers have developed an algorithm that looks at all client locations and determines their likelihood of loss.
Following a six-year surveillance of its global industry, FM Global’s algorithm identified 1,000 sites, or two per cent of client locations, that are predisposed to large losses. This small number of sites accounts for a disproportionate number of large losses, and this year alone accounts for more than one in three losses of over $US3 million.
No risk is the same but FM Global believes most losses are preventable and should not be accepted as an inevitable industry burden.
Recognising risk of loss
By identifying where the greatest risk of loss is located, FM Global transfers the results from its predictive analytics to the engineers engaged with clients. This information is used to prioritise high-risk areas where loss is most likely.
It has about 1,800 practicing engineers – including 200 claims professionals – who test and review potential risks, offering clients a clear understanding of their specific exposures from day one.
Within the mining sector, risks can be identified across the whole network. In one case, FM Global was able to reduce risk of loss worth up to $14 billion in an Australian mining company, including exposures in rail, road and equipment.
A mutual benefit
FM Global’s membership provides quality risk assurance through its expert engineering and business continuity planning consultant services, which are provided at no extra cost to clients. It’s also built a community that benefits the wider industry through the mutual’s tailored and overarching insurance policies.
As a mutual business, this knowledge in turn creates a wealth of experience for the wider industry to learn from, adapting recommendations to reduce the risk of identifiable and preventable losses that are present within the production house.
“As a mutual, FM Global believes we should be insuring philosophically aligned businesses that have the same attitude towards risk as the rest of our clients do,” said Lyndon Broad, FM Global operations manager.
Download the whitepaper below to find out more.