AIR brings cat expertise to the masses

Risk Management, June, 2009 by Jared Wade

One refrain that is almost universal among risk managers is the fact that insurers rarely understand--or at least rarely acknowledge via premium rates-their organizations' unique risks. But in many cases, these same risk managers themselves fail to fully understand the nuts and bolts of the key operational factors that pose the largest threats. Particularly when it comes to the structural risks of their industrial facilities, there is often a disconnect between how vulnerabilities are perceived between those sitting behind a desk running the numbers and those walking the floor running the facility.

To help bridge this divide, AIR Worldwide has launched its Catastrophe Risk Engineering practice, from which the company will send one of its structural engineers to conduct a detailed assessment of how any disaster could damage every lever, pipe and wall in a facility. Often, the identification of such threats is based on speculation and generalities, where as it takes a thorough walk-through and a detailed checklist to truly gauge the unique risks posed to the facility.

Especially as risk managers try to ensure proper mitigation in the face of declining budgets, there may be many benefits to seeking AIR's external expertise, which includes earthquake/ wind engineering services, post-event damage assessment and repair development. "Risk managers were telling us they need this, but can't find it," said Dr. Akshay Gupta, who heads the practice. "No one was targeting the corporate-level risk managers who might need something more detailed than portfolio level analysis."

For AIR, this new practice is essentially designed to bring its macro-level catastrophe expertise to the micro-level. And in addition to physical damage assessments, business interruption analysis is also provided. "When we look at something in that excruciating detail, we're also looking at the entire business process," said Gupta. "It's driven by the physical damage, but it encompasses the whole process of business interruption."

Thus far, AIR has focused this new practice on industrial facilities and offshore operations including oil rigs, but as the practice gains size and experience, the company will be pushing further into the commercial facility, hospitality and health care sectors.