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All business activities involve some degree of risk. The successful management
of that risk determines to a large extent the success of the business.
A successful risk management program for a distributor should include
safety, security, regulatory compliance, quality, operational integrity,
insurance, and plans for preparation and recovery as primary issues of
concern. In each of these areas, there is significant exposure to extra
costs, business interruptions and diversion of management's time and attention
in dealing with events that should be avoided or reduced.
| Online
Exclusive |
| Facing Down Mother
Nature |
| Events of the late summer along the Gulf
Coast have brought into focus the vulnerability of our
normal activities to the ravages of nature. Hurricanes
Katrina, Rita and Wilma represented powerful forces that
destroyed property, infrastructure and commerce.
When conditions develop indicating a
hurricane is approaching, it is recommended that the
following actions are taken:
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- Close valves on tanks, tube trailers
and storage banks.
- Move as much material as possible
to elevated areas such as docks and warehouses.
- Nest individual cylinders in storage
and tie them together with ropes or binders.
- Move palletized cylinders to elevated
areas.
- Shut down all electrical equipment.
- Secure the facility by protecting
glass windows and doors.
- Secure any items that are subject
to floatation.
- Prepare emergency kits to include
food, water, first aid materials, a flashlight, batteries,
gloves and rubber boots. Maintain emergency kits at
the facility, and should a natural disaster occur,
distribute to employees as needed.
- Review and implement your pre-planned
action list.
- Shut off utilities including electricity
and natural gas.
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Safety First
The goal for any business with regard to safety should be that none of
its employees, vendors, customers or the public be injured, experience
property damages, or be inconvenienced by an accident involving that business.
In order to work toward achieving this goal, every business must have
a commitment to safety, starting at the top of the organization. It is
important that employees be trained continually about the hazard potential
associated with their jobs regarding the risks to themselves and others.
It is important to work closely with local emergency responders to keep
them informed and up-to-date with respect to activities at the facility
and the materials that are stored and used there.
Security Safeguard
Maintain wariness about your surroundings and teach your employees to
observe and take notice of any unusual activities in or around your facilities.
Impress upon them that they should not discuss characteristics of your
storage or operations with telephone callers or unknown persons. Be certain
that your facility is protected physically to the best practical level
and have alarms for intrusion after business hours. During the business
day, utilize technology and personnel to avoid any unauthorized entry
or activities.
A Risk Management Plan
should address the following areas: |
- Maintain outside storage in an orderly
manner. Do not allow debris and discarded items to accumulate.
- Have materials available to protect glass
doors and windows, along with the tools needed to install
them.
- Have important business records and compliance
documentation secured in a well-protected dry environment.
Consider having duplicates stored at another site.
- Secure bulk tanks, vaporizers and pumps
to concrete foundations that are in suitable condition.
- Create a way to be able to communicate
with employees after the event to plan for resuming your
operation.
- Maintain a supply of materials such as
tarps to be used for temporary repair of roofs and other
structural damage.
- Have a predetermined site to relocate trucks
and other vehicles out of the area of expected flooding.
- Have established plans with customers to
resume service to their locations with available communication
avenues.
- Coordinate with local police, fire and
emergency response authorities to facilitate the protection
of your property and the timely return to the facility.
- Provide photo identification cards that
include authorization for entry to employees who will be
involved in the early return to the facility. Employees
who may be involved in returning to recently flooded areas
should maintain current vaccinations.
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The security of vehicles is an extremely important part of a successful
risk management program. Avoid leaving keys in cars, trucks and forklifts.
When vehicles are not in use, lock keys in a secure location inside your
building, especially after business hours. Drivers must not leave their
vehicles running or leave the keys with the vehicle while making deliveries.
Employees who drive company-provided automobiles or light trucks must
also take appropriate precautions when the vehicles are parked.
As the utilization of electronic means for communication and transaction processing grows, it is imperative to protect the security of your systems. Backup data into separate storage to provide protection against information loss due to a primary system failure. In addition to duplicating files of your electronic data, it is appropriate to maintain duplicate files of any important documents in a separate location. The time and cost associated with replacing these items can be extensive.
Regulatory Compliance
Regulations deeply impact the costs associated with operating businesses,
yet they are necessary to maintain a safe operation. An effective risk
management program recognizes the necessity of being in full compliance
with regulations involving OSHA, FDA, DOT, environmental rules and the
rules and regulations of local jurisdictions.
Quality Quest
The loss of a customer or group of customers may be the most immediate
risk that an organization faces. The reasons that such an event may occur
are based upon a number of factors. Among these is a failure in the quality
of a distributor's performance. Quality may involve, but is not limited
to, customer service, production performance, billing and documentation
accuracy, timely delivery and compliance to specifications. You should
evaluate the needs of your customers to ensure that their quality requirements
can be met and are being met by your organization. The risk to your organization's
success is a potentially high one if the quality factor is not adequately
addressed.
Operational Integrity
Operational integrity is an area in which the risk for injury and property
damage is potentially high. The concerns in this area have to do with
handling inventory, filling cylinders, utilizing proper procedures and
methods, and maintaining equipment. You must make certain that storage
racks, hoists, manifolds, valves, pumps, compressors, gauges, analyzers,
scales, forklifts, dock plates and cylinders are properly maintained.
Take steps to assure they are being used in the manner for which they
were designed. All employees involved in the use of equipment and assets
must be trained in their proper use, and they must fully understand that
no shortcuts can be taken when it comes to the performance and use of
this equipment.
Insurance Coverage
The reality is that it's just not possible to eliminate all risks, and
adequate insurance is required to protect your organization against the
risk of a major loss. It is important to understand the exposures your
business faces and the risk factors associated with these exposures.
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| The attorneys of Dickstein,
Shapiro, Morin & Oshinsky prepared "An Overview
Of Insurance Coverage For Losses From Hurricane Katrina"
to help those engaged in the rebuilding process. Hindsight
is 20/20 and the information about coverage possibilities
is a must-read for risk planning. Read
it here. |
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Preparation Plan
Responding to the circumstances of a dramatic event can be more effective
if you have a backup plan in place. Pre-determine options so that in the
event of a catastrophe you can have access to delivery vehicles, to communications,
to inventory and to a place to conduct business. You will need a way to
obtain cylinders and gases and to record and track transactions. Unfortunately,
not all catastrophes provide advance warning. The best way to mitigate
the risk is to have good business practices in place. These include a
strong safety program, appropriate training for employees, and a clean
and orderly facility. Perform regular inspections of electrical systems
and devices. Verify that burglar, smoke and fire alarms are operational
and ensure that flammable materials are stored properly.
We all are hopeful that we will never experience catastrophic events like the hurricanes we have recently seen. Unfortunately, that is not the likely course of history. We can, however, take steps to minimize and, in some cases, eliminate, risks to our businesses and to ourselves. Work to reduce risk through good business practices.
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