Risk Engineering Q3 2021

The majority of risk engineering surveys continue to be completed remotely, however, as travel restrictions ease in several parts of the world, there are encouraging signs of physical site visits recommencing. The situation is far from uniform, with physical surveys accounting for 40% to 50% of activities in the Middle East and Latin America; while our London and Asian based teams have been more limited in their ability to travel (10% to 15% completed physically). Use of wearable technology to livestream from locations has been an invaluable tool for broadening participation in the risk survey process.

At the start of the past quarter, Marsh Specialty opened a new risk engineering hub in Al Khobar, Kingdom of Saudi Arabia, our third hub in the Middle East and Africa (MEA) region. The hub uses local resources to provide a full suite of risk engineering services, including product liability surveys, business interruption reviews, and terrorism and political violence assessments to energy and power companies and commercial property firms across the MEA region.

Demand is high and likely to grow for risk engineers with experience in renewable energy, particularly wind and solar, and transition technologies such as hydrogen and carbon capture and storage. Marsh Specialty recruited 10 engineers across our global hubs in the third quarter, driven largely by the changing risk landscape for energy and power companies as many rapidly embark on a path towards decarbonization.

At the same time, our team is actively engaging in increased discussions with clients and market engineers about evolving and enhancing our risk engineering tools, methods, data, and modelling capabilities to help clients better understand and mitigate evolving exposures. For example, the ability to quantify the increased frequency and severity of extreme weather events is crucial for many of the renewable energy technologies. We are well advanced in building more sophisticated and more relevant risk engineering estimated maximum loss models.

Sharing industry best practices is a fundamental objective of the risk engineering process. In September, we released a new position paper, Management of Temporary Repairs, to address the issue that mechanical integrity failures amount to over a third of major insurance claims. The Liberty Specialty Market loss database shows that half of all claims from 2000-2020 were due to mechanical integrity issues, and over two-thirds of those losses were due to corrosion of piping systems. Marsh Specialty’s position paper provides essential guidance on best practice common repair techniques, raises awareness of industry standards, and provides recommendations for improved management of temporary repairs.

We are also pleased to have expanded our suite of deep dive surveys to include four services specifically tailored to key risks in the power sector:

Process safety management
Human elements
Emergency systems
Asset integrity management.

Deep dive surveys focus on reviewing additional records and completing field checks that are not normally practicable during a standard risk engineering survey. As a result, they provide clients with an in-depth understanding of risk quality, and insights and advice tailored to specific risks.

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