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Insurance companies and banking establishments are frequently at the leading edge of understanding the risk profile of organizations. Based on data presented by Donald Schubert, Senior Vice President, Marsh Insurance and Risk Management, at Meridium Conference 2010, Asset Performance Management (APM) is becoming a significant influencer in the terms and pricing of Insurance, which in turn influences Banking terms. Marsh is a world leader in delivering risk and insurance brokerage services and solutions to its clients. Founded in 1871, the company offers a unique perspective on the changing dynamics of its own industry, as well as the industries it serves. One of the key changes the company has witnessed in the last five to seven years is the growing importance of being able to provide real time asset Risk information. "Nobody takes big chunks of your risk anymore," says Schubert. Up to 20% of an organization's risk profile is determined by their ability to demonstrate in a timely and straight forward manner that they are managing their physical assets well and are mitigating risk. It is imperative that an organization be able to document trends such as reductions in unplanned events, says Schubert. "The progress our clients using Meridium have made in supporting Risk Management objectives is spectacular," says Schubert. "When you work with programs like Meridium that support risk issues, the availability and reliability of the plant, mitigation of loss and avoidance of unplanned events, you are directly bearing on the company's experience and the costs attendant with the deductible structure." But according to Schubert, the significant financial benefits associated with having vital performance related asset information at your fingertips goes beyond reduced insurance premiums and loan rates to the heart of any organization - profits. Converting documentation to dollars Recent catastrophic events have only heightened insurance companies, creditors and company CFOs' views on the importance of Risk Management. Asset Performance Management is becoming a more significant percent of the litmus test for the overall health and profitability of a company. "We have seen absolutely dramatic results from companies engaged with Meridium," says Schubert. "Some have experienced a bump of 4 to 6 points in generation - little numbers, representing big profits." So how can asset performance management programs reap the rewards commensurate with their contributions? According to Schubert, in the past it was difficult for Operations and Maintenance to find the time or the data to adequately demonstrate the value their efforts were having on improving asset availability and reliability. With data all over the place, asset performance gains could not be effectively documented and were diminished, the Risk Managers could become frustrated, and the organization's risk profile suffered. Today, systems such as Meridium solve the 'Profiling' issues, says Schubert.
Demonstrating to an insurer that you are proactive in maintaining your equipment assets isn't the struggle - proving that what you're doing is actually reducing the risk of breakdowns and business interruptions is much more difficult. Using Meridium, we consolidate all of our equipment-related data in one place; apply rigorous analysis to "measure" the effectiveness of our work processes on minimizing the risk of machinery failure, loss of business interruption, and regulatory and safety incidents; and then adjust them accordingly. It replaces a lot of the "best estimates" with "hard data" lowering the risk for both the insured and the insurer. Loa Jansen, Manager of Asset Management Xcel Energy, October 2009, APM Advisor
Marsh customers using systems like Meridium quickly produce the necessary documentation in a one page, summarized format which is handed off to the Risk Manager to successfully leverage for price, terms and conditions. "There is no better way to support the fact that you are managing assets well and are mitigating risk than by showing outage rates that continue to trend down to a minimum, and stay level," says Schubert. Once Risk Managers see how asset performance management can significantly improve the organization's risk profile and influence the bottom-line, they become a key supporter and voice to upper management for future asset performance- related investments. Marsh clients using systems like Meridium have experienced significant reductions in forced outages (Losses by any other definition) and improved Reliability and Availability. Another part of the success equation revolves around financial captives. If an organization is using a financial captive and can document success in mitigating and reducing loss, and that Asset Performance Management has improved, the financial captive recognizes the success factor it has been to the captive staying healthy and reverse funding by the captive for engineering risk mitigation can be done. Marsh is involved in developing the risk profiles for a large number of companies in the world. Based on their observations, some of their most successful clients are using Meridium to successfully manage industry best practices including: Click here to view the video, "Insurance Industry View: Asset Management Program/Audits", by Donald Schubert, Senior Vice President, Marsh Insurance and Risk Management, and learn the asset performance best practices being used by Marsh clients around the world, as well as tips on how you can improve your organization's risk profile and boost asset performance investments at your company.
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