Chemical Industry: Navigating Emerging Risks and a Challenging Market

Certainly! Here's a rephrased version:

Risk managers in the chemical industry face substantial challenges, with potential business interruptions posing significant threats alongside the high costs of equipment. Furthermore, the hard insurance market compounds these issues by driving up premium costs while reducing available capacity.

To provide insights into the risk management landscape within the industry, Kozeta Rexha, Client Executive and Chemical Industry Practice Leader at TÜV SÜD Global Risk Consultants, joined Peter Roueche, Director of Insurance and Enterprise Risk Management at Ingevity Corporation, on an episode of RIMScast, a popular podcast by RIMS. Their discussion covered a wide range of topics, including emerging risks, mergers and acquisitions, supply chain disruptions, and human errors.

Key takeaways from the conversation include:

1. Risk Retention Strategies: Chemical companies, including Ingevity, are exploring options for retaining more risk. This involves evaluating premium budgets and assessing cost increases related to asset replacement, business interruptions, and rate hikes.

2. Shift Towards Self-Insurance: A growing number of chemical companies are opting for self-insurance, highlighting the importance for risk managers to effectively manage property risks.

3. Increasing Human Element Exposures: Employee attrition in today's labor market is leading to an increase in human error-induced accidents, emphasizing the need for strong cultures, succession plans, and process safety management.

4. Emphasis on Knowledge Transfer: Ingevity focuses on knowledge transfer to mitigate risks associated with human error, employing methods such as manuals, hands-on training, and employee shadowing.

5. Supply Chain Disruptions: Delays in new equipment deliveries due to supply chain disruptions are prolonging business interruptions, despite stabilization in raw material and product supply chains post-pandemic.

6. Inflation and Property Valuations: Inflation has resulted in higher property valuations, necessitating reassessments to ensure adequate insurance coverage.

7. Boiler and Machinery Risks: Approximately half of losses in the chemical industry stem from equipment breakdowns, highlighting the importance of incorporating boiler and machinery risk engineering into risk management plans.

8. Mergers and Acquisitions: Mergers and acquisitions can lead to losses if not properly managed, underscoring the need for risk managers to be involved in negotiations from the outset to understand and address potential risks and exposures.

9. Importance of Property Risk Engineering: Property risk engineering plays a crucial role in minimizing losses for chemical risk managers by providing independent engineering insights that positively impact the bottom line.

These insights shed light on the complex challenges faced by risk managers in the chemical industry and underscore the importance of proactive risk management strategies.