Page 230 - RISK Management IC 86

Risk Management

(d) (i) Costs - The total direct costs of risks are : (a)
Capital costs of (i) loss prevention equipments and (ii)
higher standards of construction. (b) Current costs
(labour and materials) of (i) maintenance of buildings,
plant and loss prevention equipment. (ii) Additional
supervision to reduce losses. (iii) security systems. (iv)
first aid and (v) safety courses and seminars.

The indirect costs are : Disruption of production (i)
while loss prevention equipment is being installed or
maintained. (ii) continuing interference with production
flows by loss prevention measures. (iii) labour disputes
over loss prevention measures.

(ii) Benefits of loss prevention - Direct benefits of loss
prevention would be (a) direct premium reductions (b)
government and other grants.

Indirect benefits of loss prevention are : (a) reduction in
probability/size of uninsured/uninsurable losses , from
amongst property losses, liability losses, personnel losses
and business interruption losses. (b) Contingent
reductions in premiums for experience rated policies.
(c) Spin off benefits in terms of productivity, labour
relations, public relations.

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