The manufacturing sector represents one of the largest workforces and includes a diverse group of industries such as food and beverage, technology, metal, chemical, and textiles, to name a few.
Explosions, water damage, building structural failures, cyber and other catastrophic incidents during the handling and processing of many materials within manufacturing can cause worker deaths and injuries, business and economic losses and serious impact on the surrounding communities and environment each year.
In addition to this, business interruption is a significant part of most property and liability claims in the manufacturing sector. Even relatively small incidents can result in multi-million pound liability claims.
The impact of unplanned downtime can be both costly and varied and in some sectors, could have seriously damaging consequences.
Headline-hitting incidents around the world have demonstrated the effect unplanned disruption can have on a company’s balance sheet, regardless of size. The importance of having sufficient liability limits and wider insurance protection has never been greater.
Unplanned downtime remains an unsolved conundrum, but it is certainly one worth solving, or at least making sure you have an established business continuity plan (BCP) in place.
Stages of a loss
At CNA Hardy, we have identified three main stages of a loss, following an event: incident management, business continuity/crisis management and recovery of market position.
Incident Management
This could be anything from getting a fire brigade on site, in case of a fire, to immediate access to IT security teams if the incident is cyber or technology related.
Business Continuity / Crisis Management
We suggest the following action points to be integrated into any response plan:
- Activation of the business continuity plan (BCP);
- Initial communication with customers, HSE, environmental agency and the press;
- Reinstatement of damaged equipment through from design to commissioning;
- Making sure product specifications are met at the nameplate capacity; and
- Managing re-release into specified market.
Recovery of market position
Once an incident has occurred and a business’ continuity plan is in place, organisations next need to think about recovery, which more often than not will include, customer orders, market conditions and utilisation rates.
Risk and confidence in manufacturing
When it comes to the manufacturing sector, with all the different industries that fall under its umbrella, it is perhaps unsurprising that risk is at the forefront of business leaders’ minds.
In our recent Global Risk & Confidence survey, those surveyed pointed to economic, political, cyber and supply chain as the biggest risk concerns they face, contributing to 78% of the overall risk profile for the sector.
Not only are these risk areas complicated in their own right, the interconnectivity between them creates a far more complex and relatively unknown landscape. Uncertainty is something we are all increasingly having to become more used to.
When it comes to unplanned disruption it’s hard to predict when something is going to go wrong and just how badly it could go wrong. It is in light of this, having a BCP in place has never been more important.
At CNA Hardy, we believe these should be built on the back of insight we can glean from previous incidents. We continue to ensure we share learnings with our clients from ongoing claims and incidents. In fact, a big part of our loss prevention work is built around that.
While unplanned downtime will continue to remain a problem for the foreseeable future, organisations don’t need to feel helpless. If you have an up to date BCP in place, help is already at hand.
By Stuart Kenyon
Head of Risk Control