Reducing Total Cost of Risk Across the Railway Organization
Railways that effectively integrate risk management and risk transfer processes with safety management systems can often reap financial and operational benefits.
A comprehensive risk management program includes the successful integration of safety management systems with the purchase of insurance to protect against catastrophic events and losses.
While railways are perceived as one of the safest modes of transportation, recent disasters around the world have highlighted the safety concerns facing the industry. Such disasters can shake the confidence of travelers, shippers, regulators, and surrounding communities. But railway organizations that effectively integrate risk management and risk transfer processes with safety management systems (SMS) can often lower their total cost of risk (TCOR) and ultimately improve their financial results.
Railway organizations with risk management programs that incorporate SMS — a comprehensive framework for systematically managing risks — can better demonstrate to insurers their safety efforts, which can favorably affect premium costs and lower total claim payouts not covered by insurance.
While some transportation entities employ SMS to mitigate hazards through the application of engineering solutions and operating procedures, those that use SMS to holistically engage the entire organization can produce both operational and financial rewards and better manage the railway.
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