V Subba Rao, head, risk services, Chola MS Risk Services
Ltd, shares his perspectives, expects risk mitigation
services to grow with the growth of the insurance sector.
By Venkatachari Jagannathan
The promoter of a popular hotel chain in India was shocked
to learn that a thermal imaging study by Cholamandalam
MS Risk Services Limited, part of the Murugappa Group,
revealed that a new hotel had 22 ''hotspots''.
''hotspots'' refer to those electric points that emit more
than normal heat, making them trigger points for potential
electrical fire accidents. The hotel chain asked Chola
MS Risk Services to conduct thermal imaging studies at
all its properties to be able to take corrective measures
across the chain.
more do corporates look at risk management companies to
merely to save insurance premium. Today corporates would
like to be seen as responsible corporate citizens by minimising
the accident risks," says N V Subba Rao, head, Risk
Services, Chola MS Risk Services.
further adds, "Rather than reducing the premium outgo
there have been instances where after our risk inspection
report, companies have increased their insurance coverage
by paying higher premium."
Chola MS Risk Services is instrumental in getting a sizeable
business for the $2-billion Murugappa group''s non life
insurance company, Cholamandalam MS General Insurance
Company Limited. For instance Madras Cements Limited,
which initially hired the risk management company to conduct
a safety audit later shifted its insurance account to
Cholamandalam MS General Insurance.
experienced hand in loss prevention and safety, Rao, 44,
is a B.Tech (mechanical) and an associate of the Institute
of Risk Management, UK. Earlier, while with the Loss Prevention
Association (LPA) of India he had investigated more than
120 fire accidents across the country.
1998 he joined Chola Axa Risk Services. However, global
changes in the shareholding pattern led to Axa exiting
the Murugappa joint venture. When it tied up with Mitsui
Sumitomo for the non-life insurance venture, it was natural
for the Murugappa Group to st up an equal venture with
the Japanese company for its risk management services
a lull, Chola MS Risk Services hit the growth trajectory
from 2002 onwards. Today it has 25 engineers on its rolls
and couple of more will be added soon. "We have conducted
safety audits for 18 out of 26 fertiliser plants in India,"
year the company did 160 assignments including couple
of overseas projects. The company also services corporates
in Hong Kong, Thailand, Taiwan, Indonesia, Singapore and
Sri Lanka. Chola MS Risk Services is the first Indian
risk management company to be on the Kuwait Oil Company''s
panel of risk managers.
Rao talks about the risk management services business
and its growth drivers. Excerpts.
the importance of risk management services.
in India, every 48 hours a major fire resulting in loss
of over Rs50 lakh breaks out. The total marine losses
incurred by private general insurance companies in India
for FY06 amounted to Rs1,164 crore.
this, risk management is an investment to protect the
future value of a company by mitigating the impact of
a major loss and the company''s ability to generate positive
return to shareholders and employees.
instance in Hurricane Katrina that hit parts of the US,
companies that have implemented engineering recommendations
had eight times lower damage than the ones that chose
not to implement them.
notable achievements of Chola MS Risk Services
The manual developed by us for building petrol bunks for
a multinational oil company later became the blue book
for setting up such outlets here. In the case of a car
carrier, the implementation of our suggestions improved
its mean time between accidents from 14 to 107 days.
do safety audits for construction, logistics, ceramics,
bulk drug, cement, chemicals, paints, electronics, telecom,
food processing, high rise buildings, hotels, BPO, petrochemical
plants, refineries and power plants. Chola MS Risk Services
will soon start green building certification.
don''t see Chola MS Risk Services marketing its services
We will soon setting up a focused marketing department.
We get our clients through word of mouth and through our
website. As of now we are able to respond to the market
demands. We target is medium and large sized companies.
We expect good orders from overseas market. This year
our focus will be on chemical industries, retail chains
and power plants. Target revenue this year is $1 million.
Last year the revenue was Rs2.7 crore.
will the detariffing of non-life premium rates impact
Surely the market for us would expand. In a free pricing
market, insurers would demand action taken report from
their customers on safety precautions. The risk management
flow chart is like this identification of risks,
implementing risk reduction measures, emergency measures
for containing risk and finally comes transfer of risk.
do suggest retention and transfer in loss of profit machinery
breakdown policy. We base our recommendation after studying
the cash flow, maintenance history, availability of spares.
It is not only premium savings we do. We also assist in
companies to get adequate insurance coverage to avoid
under or over insurance. It should be mentioned that we
are more into risk engineering and high end consulting.