Understanding Insurance: The Importance of Engineering Risk Analysis

Year of Humanitarian Engineering

Understanding Insurance: The Importance of Engineering Risk Analysis

Outline 

Introduction



Characterising Risk



Risk Management Strategies



Alternative Strategies





Practical Impacts of Varying Risk Management Strategies Closing Remarks

Introduction 

Recent events



Expectations



Infrastructure limitations



Constraints, limitations, and boundaries

Characterising Risk 

The term 'risk' −

the uncertainty of an outcome of an event 

(ISO 31000:2009)



Pure risk



Speculative risk



Perspective



Risk management

Risk Management Strategies (1) 

Strategy −

the bridge between policies and objectives

−

ways, means, and ends



Use of the term 'strategy'



Risk management strategies −

Avoidance

−

Retention

−

Non-insurance transfer

−

Loss control

−

Insurance

Risk Management Strategies (2) 

Insurability −

Strategy 

Large number of homoegenous exposure units



Accidental and unintentional



Determinable and measureable



Not catastrophic



Calculable chance of loss



Economically feasible premium

Alternative Strategies (1) 

State (or nationalised) insurance −

Tax based

−

Conflict with 'free market'

−

Perspectives

−



Politicians



Property developers



Insurance companies

Safety culture and continuous improvement

Alternative Strategies (2) 

Voluntary donations −

Driving factors for contributions

−

Subsidising others

−

Safety culture and continuous improvement

Practical Impacts of Varying Risk Management Strategies 

Planning and preparation −

Complexity

−

Disparate inputs

−

Tension between pure and speculative

−

Rhetoric

−

Legislation and regulation

Closing Remarks (1)  

Managing risk is not simple Risk management strategies require multiple inputs that may conflict



Challenges of engaging stakeholders



Selling the cost to society



Continuous improvement and safety culture

Closing Remarks (2) 

Engineers must: −

articulate risk

−

understand first, second, and third order effects

−

engage with society on safety culture and continuous improvement

−

remain a competitive, but not adversarial, profession

−

ask 'so what' and then act