Arkwright Mutual Launches Training Initiative To Prevent 'Human Factor' Losses
The $400,000 initiative is a series of one-day "Loss Control Decision Making" seminars designed to give managers an understanding of how to prevent and control property losses due to human error, and of how property conservation translates into profit conservation.
"Arkwright recognizes that the 'human factor' is a significant cause of loss, and the pressure on people in the workplace is growing in this increasingly competitive and global marketplace," said Michael Morganti, training specialist with Arkwright Customized Education Services (ACES).
Arkwright's guiding principle is that it is far better to prevent property damage and business interruption than it is to simply insure losses. Since insureds are opting to retain more risk and higher deductibles, it becomes that much more important for them to prevent the range of human factor losses no longer covered under the higher deductibles of their insurance policies.
According to research by Arkwright's jointly owned affiliate Factory Mutual (FM), approximately 70% of all property losses involve or are attributable to the "human factor." Arkwright and FM have determined that proper training would have prevented many of these losses.
"With mergers and acquisitions proceeding at a record pace, and 'downsizing' and 'reengineering' still part of the landscape, employees are expected to perform more functions and undertake new tasks," Morganti said. "These demands can increase the risk of losses that cost an organization competitive advantage, or even jeopardize its very survival."
"Human factor" is the term used to describe "inappropriate actions, or inaction, that can result in property loss." For instance, the average U.S. company waits approximately 19 minutes before calling 911 to report a fire, allowing ample time for a fire to blaze out of control. And, according to the National Fire Protection Association, 500,000 arson fires cause an estimated $2 billion in damage each year.
The top causes of fire and explosion losses to properties insured by the Factory Mutual System from 1990 to 1996 were electrical, arson, hot surfaces, hot work and spontaneous ignition. Total losses were approximately $3.1 billion (in 1997 dollars).
According to FM research, inadequate maintenance is the primary factor in electrical losses. More than half the losses due to improper hot work are caused by negligent contractors, an important consideration for companies doing more work through "outsourcing." Other factors in losses include poor housekeeping and operator error. In addition, improperly closed sprinkler valves and inadequate emergency response can exacerbate losses.
Arkwright's "Loss Control Decision Making" seminars will examine these issues and such topics as managing change, the qualities of a well-protected facility, fire protection programs, maintaining equipment and emergency organizations. The seminars conclude with simulations of a fire emergency.
More than 100 organizations, including Fortune 1000 firms, have taken advantage of this Arkwright initiative, enrolling more than 425 employees into the program.
"Arkwright views this training initiative as an investment in people that will assist in preventing, mitigating and controlling losses," Morganti said. "Preventing losses helps business preserve market share and opportunity. It helps government agencies save taxpayer dollars and maintain uninterrupted delivery of services. And it helps non-profit organizations fulfill their missions and operate with private-sector efficiency."
Arkwright will conduct the six-month initiative from June to November throughout the United States, including Alaska and Hawaii. The seminars are offered free of charge to Arkwright customers. ACES can develop custom training programs for organizations that do not have a business relationship with Arkwright.