Marcello FORTE, Emanuele SALVADOR AXA Matrix Risk Consultants, Italy, Republic of

1. IDRC DAVOS 2012
Davos, 29/08/2012
Marcello Forte
marcello.forte@axa-matrixrc.com
Emanuele Salvador
emanuele.salvador@axa-matrixrc.com
RISK ENGINEERING DECISION TOOLS FOR
INDUSTRIAL RISK MANAGERS SUPPORT

2. « a snap-shot »
AXA MATRIX Risk Consultants is the AXA Group entity and brand which delivers
world-wide services for the development and implementation of consulting products and
industrial risk analysis.
 More than 150 Risk Consultants located in 18 countries across 4
continents
 Specialized in multidisciplinary Risk Assessment and Risk Management
support
 Over 35 years of risk consulting experience and collaboration with the
most important world-wide Corporate Clients
 Over 200 Corporate Customers
Davos - 29/08/2012

3. Risk Management support
Risk Managers’needs in order to:
 Protect all Company assets.
MULTI-  Guarantee business continuity by
PERIL RISK
ANALYSIS
preserving brand value and market
CONTROL
EXPOSURES AND share.
REDUCE  Optimize Company risk-transfer.
PROBABILITY AND
SEVERITY OF  Provide Balance Sheet protection.
POTENTIAL LOSSES
LOSS PREVENTION
INVESTMENTS
OPTIMIZATION For optimised Risk Management
Davos - 29/08/2012

4. Risk Management:
a continuous “(r)evolution”
External factors set off insurance
market difficulties, amplified for
2001-2003
those companies without
adequate Risk Management
structures
Global financial crisis forces
2007-2008 Companies to adopt reliable
Risk Management actions
Awareness of a more
2010 integrated Risk
Management approach
Davos - 29/08/2012

5. Enterprise Risk Manager (ERM)
This new trend generates the need to implement the Risk
Management organization, by concentrating all the RM
functions inside one structure, where they can interact
between each other. This structure will be coordinated by the
“Enterprise Risk Manager” (ERM), who reports directly to
Company Management Board.
Industrial Risk Engineering (pure risks)
Davos - 29/08/2012

6. Analysis objectivation and quantification
Working into a multidisciplinary context, it’s vital that:
• analysis methods and criteria are as homogenous as possible with
the ones used in other areas (financial, strategic, operational ecc).
• analysis evolve from qualitative to quantitative parameters:
•Qualitative Insurance Manager
Reliability of the outputs
Complexity level (cost)
Applicability on a large scale
•Semi-Quantitative Risk Manager
•Quantitative Operational Risk Manager
Davos - 29/08/2012

7. AXA MATRIX:
Our “traditional” decision support tools
ACCESS@RISK©
Dedicated on-line portal
VISIORISK™
Visualization & Cumulative
Risk Analysis
CITRAN™
Investments
optimization
ISORISK™
• Fire Risk mapping
• Machinery Breakdown
• Theft CONSTRUCTION@RISK
• NAT-CAT risks
•Preliminary analysis of new projects
PROPERTY@RIS •Risk monitoring during construction
K GEAR™
and commissioning phases
Tool to collect data in self-assessment
Benchmark with peers
SCAN@RISK™
ENVIRONMENT@RIS
K Environmental Risk Analysis
•
• Loss Prevention & Sustainability
Davos - 29/08/2012

8. AXA MATRIX: ISO@RISK
ACCESS@RISK
VISIO@RISK
CITRAN
ISO@RISK
PROPERTY@RISK CONSTRUCTION@RISK
GEAR
SCAN@RISK
ENVIRONMENT@RISK
Davos - 29/08/2012

9. ISORISK™: definition
ISORISK™ is a graphic tool that aims to:
 Share immediately with the Customer the risk level existing
at its premises
 Benchmark the different production plants, regardless of
business activity sector
 Identify the priority plants to be implemented
 Simulate the effect of prevention and protection
implementations
Davos - 29/08/2012

10. ISORISK™: basic methodology
R = S x V
R = Risk.
S = Severity: assessment of loss arising from
harmful events, typically expressed in
economic terms.
V = Vulnerability, a measure of the probability of
occurrence of a major loss. Since it is not possible
to fix any “numerical” value concerning an industrial
plant made up of thousands of parameters, an
alternative value called “Vulnerability” is used.
It is based on the evaluation, and following
processing, of some typical parameters
(indicative) of frequency of claim occurrence. Vital Trivial
Few Many
Davos - 29/08/2012

11. ISORISK™: methodology
ISORISK™ objective is to define Severity and Probability
parameters for each plant of the industrial
group, in order to display it on a global risk
map for each assessed risk.
For a given peril
80
Plant E
70
Plant A
60
Area C Plant B
50
Plant C
Severity [M€]
Plant D
40
Plant C
Area B Plant E
30
Limit between A - B areas
20 Plant B Plant D Limit between B - C areas
10 Area A Plant A
0
0 10 20 30 40 50 60 70 80 90 100
Vulnerability
Davos - 29/08/2012

12. ISORISK™: Example of
FIRE vulnerability assessement
Parameters and values, as well
as the algorithm that provides
vulnerability value, depend on:
- risk under investigation
- occupancy
- company’s objectives
Example of Fire vulnerability
assessment concerning any
industrial site (warehouses or
production plants): it is based
on 8 parameters, responsible
for the variation of harmful
events occurrence frequency.
Davos - 29/08/2012

13. ISORISK™: Actions simulation through Isorisk map
ISORISK MAP
Actions simulation
80
Simulation 1 Plant E
70
60
50
Severity
40
Simulation 2
30
20
10
0
20 30 40 50 60 70 80 90 100
Vulnerability
Davos - 29/08/2012

14. Risk Mapping…
… “Qualitative” VS “Semi-Quantitative” analysis
Transition from a qualitative to a semi-quantitative approach allows to:
 benchmark different plants with objective criteria;
 develop a set of actions for the RM process;
 define risk control strategies
Qualitative Quantitative
50
40
Severity (Mill €)
Gravité (en M EUR)
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Vulnérabilité
Vulnerability
Davos - 29/08/2012

15. AXA MATRIX: CITRANTM
ACCESS@RISK©
VISIORISK™
CITRAN™
ISORISK™
PROPERTY@RISK
CONSTRUCTION@RISK
GEAR™
SCAN@RISK™
ENVIRONMENT@RISK
Davos - 29/08/2012

16. CITRAN™: definition
Critical investments to reach acceptable NLE (CITRAN ™)
While the ISORISKTM mapping system is created to identify the “top risks” and associated “top
improvements”, the CITRANTM curves point out the impact of each loss prevention
recommendation (Loss Expectancy reduction) and the required investment (cost to complete).
. 60
Rec. N. 1
50
Rec. N. 2
40 Rec. N. 3
NLE [M€]
30
Rec. N. 4
20 Rec. N. 5
Rec. N. 6
10
Normal Loss Expectancy
0
0 10 20 30 40 50 60 70 80
Investments [K€]
Cost to complete
Davos - 29/08/2012

17. CITRAN™ : methodology
60
Rec. N. 1 Initial Loss Expectancy
50
Rec. N. 2
Rec. N. 3 Delta LE
Rec. N. 3 Post investment Loss Expectancy
40
NLE [M€]
30
Rec. N. 4
Rec. N. 4
20 Rec. N. 5
Rec. N. 6
Rec. N. 5
10 Rec. N. 6
Cost of Recommandations 1 + 2
0
0 10 20 30 40 50 60 70 80
Investments [K€]
By considering an investment based on recommendation 1 and 2, CITRAN curve shifts to the left side,
according to a quantity equal to the investment and later it shifts to the bottom side according to the difference
between Loss Expectancy based on recommendation 1 and 2.
The slope of the curve represents the measure of action effectiveness; it is the result
of loss expectancy mitigation and recommendation implementation cost ratio.
Davos - 29/08/2012

18. ISORISK™ & CITRAN™ : an application
Example of FIRE plant grading – current situation
Citran - Current Situation
100
80 Rec 01
NLE Before [M€]
60
Rec 02
40 Rec 03
Rec 04
Rec 05
20
Rec 06
Rec 07
0
0 100 200 300 400 500
Proposed Loss Prevention Investment [k€]
Davos - 29/08/2012

19. ISORISK™ & CITRAN™ : an application
Example of plant grading – Simulation of Recs. n° 1-3
Citran - Simulation of Recs. 01-03
100
80 Rec 01
NLE Before [M€]
60
Rec 02 Rec 02
Rec 03 Rec 03
40
Rec 03 Rec 04 Rec 04
Rec 05 Rec 05
20 Rec 04
Rec 05 Rec 06 Rec 06
Rec 06 Rec 07 Rec 07
Rec 07
0
0 100 200 300 400 500
Proposed Loss Prevention Investment [k€]
Davos - 29/08/2012

20. RISK ENGINEERING DECISION TOOLS FOR RISK
MANAGER SUPPORT: CONCLUSIONS
ISORISK MAP
Actions simulation
The development of new means of communication and 90
80 Simulation 1
synthesis underlines on one hand how much it is important to 70
Simulation 2
Plant E
use quantitative tools for different risks analysis and, on the
60 Plant E
Simulation 1
Severity [M€]
50
Simulation 2
other one, the need for new synthesis and reporting
Simulation 3
40
Series 1
30 Series 2
Simulation 3
methods for the risk management process. 20
10
0
0 10 20 30 40 50 60 70 80 90 100
Citran - Simulation of Recs. 01-03 Vulnerability
100
80 Rec 01
Output analysis reporting and communication should be possible
NLE Before [M€]
60
Rec 02
Rec 03
Rec 02
Rec 03
as quickly as possible, in an increasingly efficient way: it is
40
Rec 03 Rec 04
Rec 05
Rec 04
Rec 05
important to use tools suitable to highlight, quickly and
Rec 04
effectively, every detailed risk level concerning the plant and/or
20
Rec 05 Rec 06 Rec 06
Rec 06 Rec 07 Rec 07
Rec 07
0
0 100 200 300 400
Proposed Loss Prevention Investment [k€]
500 group of plants under control.
The possibility of visualization, benchmarking and cross-data ensures a strict control over
quality and reliability of the risk analysis information, amount of current and coming
exposures, cost estimated necessary for their mitigation, cost/benefits ratio, quantifiable
objectives definition about risk mitigation, thus resulting a tool suitable for risk management
activity.
Davos - 29/08/2012

21. IDRC DAVOS 2012
Davos, 29/08/2012
Thank you for your attention
Do not hesitate to contact us
for any explanation
marcello.forte@axa-matrixrc.com
emanuele.salvador@axa-matrixrc.com
RISK ENGINEERING DECISION TOOLS FOR
RISK MANAGER SUPPORT