Businesses need to restart facilities with care and caution after coronavirus lockdown to reduce risk of damages

The coronavirus pandemic has impacted global businesses and their employees – closing many operations, albeit temporarily. With businesses in many countries now preparing to reopen after a period of inactivity, it is important that they remain vigilant about the risk environment in order to identify unknown problems which might have occurred during closure, as well as to mitigate losses that might occur as a result of reopening, as a new bulletin from Allianz Global Corporate & Specialty’s (AGCS) risk consultants highlights.

“Restoring operations at a facility that was once idle or vacant presents another set of loss prevention challenges, particularly to manufacturing plants with hazardous equipment or processes,” explains Stephen Clark, Global Technical & Expertise Manager for Property Risk Consulting at AGCS. “For example, fuel-fired equipment may need to be restarted, which creates an additional risk of fires and explosions. There may be a reduction in workforce available to operate and maintain production equipment safely or to respond to emergencies. Also, lapses in maintenance of buildings, equipment and fire protection systems may create hazardous conditions.”

Businesses should pay particular attention to the condition of electrical equipment and installations, as around 20% to 30% of AGCS fire claims are related to these. Insurers have also seen a number of claims from fires resulting from technical defects or operational error after machinery has been restarted or cleaned in preparation for reopening of facilities, which has then caused further disruption to operations.

AGCS analysis of insurance industry claims shows that fires already account for almost a quarter (24%) of the value of all business insurance claims over a five-year period – the major cause of losses – while faulty workmanship and maintenance (8%) and machinery damage (5%) rank as the 3^rd and 7^th top causes of claims respectively.

According to the AGCS bulletin Coronavirus: Property loss prevention measures for restarting businesses after a temporary closure another essential action for businesses to consider before restarting operations is restoring site security. A thorough self-inspection of the site, including all buildings and equipment, to detect and correct any unsafe or abnormal conditions, such as damage, maintenance issues, improper housekeeping or storage, signs of vandalism, etc. should also be considered. Businesses should also complete and reinstate any inspection, testing and maintenance procedures that may have lapsed since the shutdown.

As always when restarting idle machinery, operators should follow standard operating procedures and manufacturer guidelines for bringing shutdown equipment or processes back online. 

In addition, those facilities introducing alcohol-based (flammable) disinfectants, such as hand sanitizers, should implement proper fire safety precautions. This should include keeping them away from ignition sources, such as open flames, encouraging employees to rub their hands dry to allow vapors to safely dissipate, disposing of all waste rags in approved, normally closed containers, and storing flammables in designated cutoff rooms or approved cabinets.

“Prior to restarting operations is the ideal time to review the effectiveness of your business continuity plan,” says Clark. “Revise the plan as needed based on lessons learned during the temporary shutdown to keep your emergency planning up-to-date.”