In the first of two articles focusing on manufacturing, Nick Tilley, Property Technical Risk Manager for AXA Commercial, discusses the impact of using more sustainable and energy efficient materials and processes on risk management.
It seems like every month brings a new development in the economy that brokers have to get their heads around.
In the last five years alone, we’ve seen a complete change to the way people across the economy work, the rapid advancement of technology into every sector (particularly AI), trade and supply disruption as a result of geopolitical turmoil, and a determination from many governments across the globe to shift towards a greener energy landscape.
That’s a macro view of change but these global issues have a very real impact upon very real businesses up and down the country, making growth and even survival increasingly hard to achieve for many.
But even when companies are surfing these waves of change, their adoption of new modes of building, manufacturing or selling their products and services may increase efficiency and drive innovation, but they often bring new, poorly understood risks with them.
Which is why AXA Commercial hosted a seminar at the Manufacturing Technology Centre (MTC) in Coventry, covering a range of topics, kicking off with an overview of sustainability in the manufacturing sector, delivered by Marie Wells, Head of Sustainability at the MTC. She explored how manufacturing can meet its net zero obligations and explained how the Centre, home to cutting edge research and development, supports manufacturers in making their individual transitions towards net zero.
She was joined by our own AXA Commercial experts Nick Tilley, Property Technical Risk Manager and Caroline Organer, Liability Technical Risk Manager.
Nick’s session focused on risk management taking a wide-ranging look at green buildings, renewable energy and heat, unattended machinery and the management of supply chains. Using more sustainable and energy efficient materials and processes are obviously huge positives for the UK’s net zero ambitions, but much of the technology and many of the approaches are relatively new and as such, bring previously unknown risks to the table.
Nick started off exploring the boom in green building construction and materials driven by consumer and investment demand. He focused on the environmental building standards that are becoming more and more influential in the UK saying: “You can’t construct a new building without taking a lot of this into account."
“The motivations for developers are both moral and financial and while we wholeheartedly back more sustainable and green buildings, some of the detail is challenging for insurance. We have to find ways of balancing the benefits of these new approaches with the risks they bring.”
Core to the sustainability of these buildings are their heating systems and Nick was keen to stress their importance in terms of both carbon reduction and in the way they influence risk.
“Solar panels are great but in parts of the market, there is a bit of a ‘fit and forget’ approach and that obviously has implications for their performance and safety. Where they’re not properly maintained, we’re starting to see fires as a result,” said Nick.
“All these materials and construction methods have implications for risk. But we can definitely offer terms – we just need brokers to help clients understand that to get the best terms, they have to understand their responsibilities when it comes to maintaining these buildings.”
For brokers interested in digging deeper, Nick reminded them that AXA has produced a document detailing a number of green energy and heating techniques and the risk implications of them.
From there, he moved more into the world of manufacturing, highlighting a range of new technologies that have been introduced to manufacturing processes of all kinds. Many of these new processes are designed to be unmanned and left running unsupervised, often overnight.
“What we want to see is the client having the engineered processes in place to detect when things go wrong, to shut it down and have a suppression system in place so you’re not burning the whole building down,” said Nick.
“We understand the risks on a lot of these developments so if you stumble across something that looks complex and you don’t understand it, talk to us as we know what the risks are and we can help your clients handle it safely,” he told brokers.
He closed by looking at supply chains and in particular, how organisations, in their pursuit of net zero, have to dig deep to ensure that every aspect is compliant with those net zero ambitions.
“We can help brokers and their clients and can guide them through the process of understanding their supply chain. A lot of companies don’t go into the necessary depth and they have to – not only to meet their net zero targets, but to get a true understanding of the risks inherent in their supply chain.”
In closing, he told brokers: “As manufacturing modernises, we need to delve a little deeper into the developments that are revolutionising it. We are seeing risks being introduced through efforts to increase sustainability, through planners and through building codes that don’t necessarily take into account the property protection. It’s up to us – the insurance market – to ensure that risk awareness remains key as the sector evolves.”
Watch out for the second article in this series, in which we’ll be exploring the considerations and emerging risks of achieving Net Zero in the manufacturing sector.
