An insurance expert has identified warehousing as one of the riskiest elements in the supply chain, “For the marine insurance industry, some of the highestrisk accumulations occur in warehouse sites whose stock values are sometimes in excess of R1bn. If something goes horribly wrong, losses are substantial, affecting the insurance industry negatively.” Because the warehouse is vulnerable to these significant losses, it’s advised not only to consider all risk, but also to take action to lessen the likelihood of incidents occurring. Brews says this mitigates the impact of incidents and reduces their severity. “We often rely on independent surveyors to inspect the premises and give any necessary advice on actions that need to be taken to improve the risk being insured,” says Brews. “Some of these improvements can be very costly, for example installing in-shelf fire spray systems can cost millions of rands which companies may not always have. In some cases, not being able to implement the recommendations could result in the client being uninsurable.” Training staff to identify hazards and potential risks is therefore just as important from a precautionary point of view. According to Brews staff are an important element when it comes to risk. While a well-trained staff can reduce risk, an unvetted staff complement can increase risk. “Of late, many of the losses we have come across have included the collusion of an employee of the client. This is an exclusion in many policies.” Warehouse risks and vulnerabilities, says Brews, are increasingly complex, making it essential for companies to work with brokers who are experienced and knowledgeable in the warehousing sector.
INSERT: Collusion of an employee of the client is an exclusion in many policies. – Mike Brews
