The coronavirus pandemic has foisted huge changes on businesses, such as staff cuts, retooling for different product lines and adapting to supply chain disruptions. Nevertheless, regardless of tumultuous times or ordinary times, change is inevitable and must be managed carefully. The key to managing change, whether planned or unplanned, is early recognition of potential exposures and hazards.
Below are three change categories and considerations for how to manage them.
1. Business Conditions: Changes in business and market conditions can affect production levels, require expansion into new markets, prompt the development of new products or introduce interdependencies within locations or supply chains.
Take these steps:
- Analyze whether these changes increase the strategic importance of certain facilities and whether they introduce hazards that increase business risk.
- Make protection changes or improvements for production lines or facilities that have been impacted by change.
- Determine if the change(s) will increase dependency on one supplier. If yes, evaluate how dependent and if the supplier is committed to loss prevention.
- Take steps to ensure supply chains are not interrupted if the suppliers are not adequately protected.
2. Physical Restructuring and/or Product Changes: Construction/renovation projects or introduction of a new product line or modifications to existing products can increase combustibility and/or introduce new hazards in the facility. For example, the hazards may arise in process flow, storage arrangements or with the specialized equipment that did not exist prior.
Take these steps:
- Become familiar with contractors before hiring them.
- Establish procedures to ensure contractors follow loss prevention practices when on site.
- View projects, new production lines or changes to existing products as an opportunity to make other protection improvement. Make sure construction, protection, equipment changes meet local requirements and FM Global guidelines. Become knowledgeable about new and unfamiliar products, packaging, materials or equipment, and the potential hazards they may represent.
- Assess changes in process or production flow and whether the modifications will create hazardous bottlenecks.
3. Staff Changes: When downsizing, organizations can lose individuals with critical experience and knowledge and the increased workload on the remaining employees often leads to errors. It also creates additional training needs to address quality and safety.
Take these steps:
- Be ready with trained back-up personnel.
- Have training programs in place.
- Post specific responsibilities in a prominent place.
- Make sure employees understand new assignments and related hazards
- Prepare for an increase in errors due to overload and stress. Consider a system to monitor production for such errors and have a communication plan to keep personnel informed of details as change is implemented and completed.
The above are just a few examples of changes that businesses face. Others that should be considered include outsourcing, consolidation, expansion, sole sourcing, installing and operating specialized equipment, and mergers and acquisitions.
AFM is here to partner with brokers and clients to provide the appropriate insurance coverage and support managing change as well as the long-term cost of risk. Speak to your AFM account engineer during the planning stages. Their experience may help you to develop the most flexible, practical and cost-effective risk management solutions.