Jame willis safety conference
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The document is a presentation given by James Coventry of Willis Towers Watson at an aviation safety training seminar for Vietnam Airlines Group. Coventry discusses the importance of considering both safety and risk management. He notes that direct costs of accidents can be high, in the billions of dollars, but indirect costs are even higher, in the trillions. Coventry urges employees to play a role in identifying, analyzing, controlling and monitoring risks to help reduce risk exposure and ensure the success of Vietnam Airlines Group.
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Jame willis safety conference
- 1. Aviation Safety Training Seminar Vietnam Airlines Group © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. May 2018 James Coventry
- 2. Why we need to talk about Safety AND Risk! © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
- 3. Thank you © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Thanks to President and CEO Thanh, the senior management and staff of VN for inviting me and allowing me to present today • Why am I here?: • I work with VN to assess risk • I negotiate VN’s premiums and claims • I ensure that VN has adequate insurance protection for its risks • What are my qualifications? • I have experienced: • 6 Total losses – 5 with fatalities • 3 weeks in the crisis center of Malaysia Airlines during MH370 and MH17 • My clients have contributed more than USD 1bn loses in the past 5 years Therefore I know what happens when things wrong!
- 4. Risk © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. “There is only one kind of shock worse than the totally unexpected… And that is the expected for which one has failed to prepare.” Risk is not all about Safety!
- 5. What are the most severe risks to VN? © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 5 $ $ $ $
- 6. Risk!! © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Severity vs Frequency
- 7. Safety – The Direct Cost ! © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Approx USD 4bn USD 50m – 100m USD 5m – 20m
- 8. Risk – Direct Cost vs Indirect Cost!! © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Direct Costs Indirect Costs USD 4bn USD 3.3trn? USD 770m USD 180m Undisclosed USD 1,200
- 9. Risk How does a Company Deal with Risk? © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
- 10. Risk How should Employees deal with RISK? © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. This is NOT an option! • Lead by example!! • You all play a key role in the success of VN • Be aware that Safety AND minimising “Risk” is the responsibility of EVERYONE in the company • Learn and Understand the Industry risks you face • Identify the Key risks within your organisation • Analyse and Quantify these risks • Communicate the risks within the organisation • Control or Eliminate the Risks • Constantly monitor effectiveness of Risk Management And finally… • “Prepare for the worst and hope for the best”!
- 11. Very Real Risks © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Airport / Aircraft Operators What Are Your Risks? What Can You Do To Reduce Your Risk Exposure?
- 12. © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Risk Identification – An airport example Runway Management Aircraft Take- off/Landing Airport Perimeter Security Adverse Weather ATC Different Aircraft type at same Airport Airside Vehicles Refuelling Catering Baggage Handling Airport Congestion Ground Handling Taxiing/ Towing
- 13. It’s NOT all about Insurance Cost…BUT! © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. What Do You Need To Demonstrate To Insurers?
- 14. © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Insurers like: Stable geo-political territory Low trends of major claims in the region Low trends of attrition claims Management that drives the Safety Culture Airlines that have a robust Risk Management Culture A Non-Punitive Just Culture Extensive Voluntary reporting A healthy SMS Airlines that share safety data Airlines that welcome outside safety oversight Accurate and Detailed Underwriting Information Insurers dislike: Geo-political risk Not knowing enough about their client Financial instability /uncertainty Airlines that treat insurance as a commodity Poor CRM Blame and Punitive Culture Avoidable claims that are repeated Attritional claims that ‘burn’ premium Poor management of media Airlines that are secretive about their safety data What do Insurance Companies expect from you Basis of Future Relationships – Eliminate Uncertainty! When claims happen insurers are prepared to pay – but not all losses are recoverable and airlines have to make the necessary investments to limit their exposures where they can
- 15. Thank You! Any More Questions? © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Editor's Notes
- WELCOME. JC THEN JR. INTRODUCE SELF SO TODAY WE WILL FOCUS ON IDEA OF RISK ROLE OF BROKER OUTLINE OF COVERAGES – BASE LEVEL TO BUILD ON THROUGHOUT THE WEEK BRIEFLY DISCUSS HOW POLICIES PAY IN A LOSS WHAT DO INSURERS WANT TO KNOW ABOUT YOU SO THAT WE CAN NEGOTIATE YOU A GOOD DEAL. HOW YOU CAN PROMOTE YOURSELF. HOW WE TAKE YOUR RISK TO MARKET EXPLAIN A PRICING PRINCIPLE UNIQUE TO THE AVIATION MARKET SHARE OUR THROUGHTS ON FACTORS INFLUEINCING PRICING STOP ANY TIME FOR GENERAL DISCUSSION + ANY QUESTIONS - THIS SHOULD TAKE SOMEWHERE BETWEEN 1HR30 – 1HR45
- FIRST WE WILL FOCUS ON WHAT EXACTLY IS RISK? WHAT ARE YOUR RISKS AS AN AIRLINE? WHAT CAN YOU DO TO REDUCE YOUR RISK EXPOSURE? AND WE WILL TOCUH BRIEFLY ON HOW YOU DECIDE YOUR RISK APPETITE
- FIRST OF ALL LET’S LOOK AT WHAT RISK ACTUALLY IS I WILL GIVE YOU 3 DICTIONARY DEFINITIONS 1) RISK IS A SITUATION INVOLVING EXPOSURE TO DANGER 2) RISK IS THE POSSIBILITY THAT SOMETHING UNPLEASANT OR UNWELCOME WILL HAPPEN 3) RISK IS A POSSIBILITY OF HARM OR DAMAGE AGAINST WHICH SOMETHING IS INSURED
- FIRST OF ALL LET’S LOOK AT WHAT RISK ACTUALLY IS I WILL GIVE YOU 3 DICTIONARY DEFINITIONS 1) RISK IS A SITUATION INVOLVING EXPOSURE TO DANGER 2) RISK IS THE POSSIBILITY THAT SOMETHING UNPLEASANT OR UNWELCOME WILL HAPPEN 3) RISK IS A POSSIBILITY OF HARM OR DAMAGE AGAINST WHICH SOMETHING IS INSURED
- FIRST OF ALL LET’S LOOK AT WHAT RISK ACTUALLY IS I WILL GIVE YOU 3 DICTIONARY DEFINITIONS 1) RISK IS A SITUATION INVOLVING EXPOSURE TO DANGER 2) RISK IS THE POSSIBILITY THAT SOMETHING UNPLEASANT OR UNWELCOME WILL HAPPEN 3) RISK IS A POSSIBILITY OF HARM OR DAMAGE AGAINST WHICH SOMETHING IS INSURED
- FIRST OF ALL LET’S LOOK AT WHAT RISK ACTUALLY IS I WILL GIVE YOU 3 DICTIONARY DEFINITIONS 1) RISK IS A SITUATION INVOLVING EXPOSURE TO DANGER 2) RISK IS THE POSSIBILITY THAT SOMETHING UNPLEASANT OR UNWELCOME WILL HAPPEN 3) RISK IS A POSSIBILITY OF HARM OR DAMAGE AGAINST WHICH SOMETHING IS INSURED
- FIRST OF ALL LET’S LOOK AT WHAT RISK ACTUALLY IS I WILL GIVE YOU 3 DICTIONARY DEFINITIONS 1) RISK IS A SITUATION INVOLVING EXPOSURE TO DANGER 2) RISK IS THE POSSIBILITY THAT SOMETHING UNPLEASANT OR UNWELCOME WILL HAPPEN 3) RISK IS A POSSIBILITY OF HARM OR DAMAGE AGAINST WHICH SOMETHING IS INSURED
- EACH AIRLINE WILL HAVE ITS OWN RISK APPETITE. MAY BE RISK AVERSE OR WILLING TO ACCEPT MORE ON THEIR BALANCE SHEET. DEFINITION OF RISK APPETITE IS the amount and type of risk that an organisation is willing to take in order to meet their strategic objectives. DEFINITION OF RISK PROFILE IS A risk profile is an evaluation of an individual or organization's willingness to take risks, as well as the threats to which an organization is exposed SO INSURANCE IS NEEDED AND I WILL THINK ABOUT… MY RISK APPETITE. DO YOU HAVE ENOUGH TO PAY FOR A LOSS? WILL YOUR BUSINESS STILL BE PROFITABLE? WHAT WILL YOUR CEO SAY IF YOU CRASH AN AIRCRAFT? HE WILL LIKELY ASK – HOW MUCH INSURANCE DO WE HAVE…. IS THAT THE MAXIMUM WE COULD HAVE BOUGHT? RISK PROFILE. WHAT AIRCRAFT DO I HAVE? AM I FLYING R44 HELICOPTERS? OR AIRBUS A380s? HAVE I HAD PROBLEMS/ACCIDENTS BEFORE? AM I PREPARED/ABLE TO PAY THE PREMIUM REQUIRED?
- EACH AIRLINE WILL HAVE ITS OWN RISK APPETITE. MAY BE RISK AVERSE OR WILLING TO ACCEPT MORE ON THEIR BALANCE SHEET. DEFINITION OF RISK APPETITE IS the amount and type of risk that an organisation is willing to take in order to meet their strategic objectives. DEFINITION OF RISK PROFILE IS A risk profile is an evaluation of an individual or organization's willingness to take risks, as well as the threats to which an organization is exposed SO INSURANCE IS NEEDED AND I WILL THINK ABOUT… MY RISK APPETITE. DO YOU HAVE ENOUGH TO PAY FOR A LOSS? WILL YOUR BUSINESS STILL BE PROFITABLE? WHAT WILL YOUR CEO SAY IF YOU CRASH AN AIRCRAFT? HE WILL LIKELY ASK – HOW MUCH INSURANCE DO WE HAVE…. IS THAT THE MAXIMUM WE COULD HAVE BOUGHT? RISK PROFILE. WHAT AIRCRAFT DO I HAVE? AM I FLYING R44 HELICOPTERS? OR AIRBUS A380s? HAVE I HAD PROBLEMS/ACCIDENTS BEFORE? AM I PREPARED/ABLE TO PAY THE PREMIUM REQUIRED?
- SO. WEVE MADE UP OUR MIND…. AND COME TO THE BEST BROKER IN TOWN EVEN THOUGH OUR LOGO LOOKS LIKE SPACE INVADERS….
- THIS AFTERNOON WE WILL TALK IN PARTICULAR ABOUT THESE 5. WE HAVE ALREADY MENTIONED ABOUT THE RISK YOU FACE AND HOW THESE ARE IDENTIFIED AND I WILL NOW PASS OVER TO PETER WHO WILL TALK TO YOU ABOUT WHAT DRIVES THE PURCHASE OF INSURACE YOUR COVERAGE AND POLICY DESGIN
- LETS NOW MOVE ON TO WHAT YOU CAN CONTROL AND HOW YOU CAN MAKE YOUR RISK THE MOST APPEALING TO INSURERS.
- ATTRITIONAL LOSSES ARE THOSE TYPICALLY UNDER $10M. THEY ACCOUNT FOR $450M OF LOSSES EACH YEAR AND ARE CONSIDERED ‘PREDICTABLE’