Distributor Risk Management Plans

Some tips to protect your welding and gases business.

All business activities involve some degree of risk. The successful management of that risk determines to a large extent the success of the business. A successful risk management program for a distributor should include safety, security, regulatory compliance, quality, operational integrity, insurance, and plans for preparation and recovery as primary issues of concern. In each of these areas, there is significant exposure to extra costs, business interruptions and diversion of management’s time and attention in dealing with events that should be avoided or reduced.

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Facing Down Mother Nature
Events of the late summer along the Gulf Coast have brought into focus the vulnerability of our normal activities to the ravages of nature. Hurricanes Katrina, Rita and Wilma represented powerful forces that destroyed property, infrastructure and commerce.

When conditions develop indicating a hurricane is approaching, it is recommended that the following actions are taken:

  • Close valves on tanks, tube trailers and storage banks.
  • Move as much material as possible to elevated areas such as docks and warehouses.
  • Nest individual cylinders in storage and tie them together with ropes or binders.
  • Move palletized cylinders to elevated areas.
  • Shut down all electrical equipment.
  • Secure the facility by protecting glass windows and doors.
  • Secure any items that are subject to floatation.
  • Prepare emergency kits to include food, water, first aid materials, a flashlight, batteries, gloves and rubber boots. Maintain emergency kits at the facility, and should a natural disaster occur, distribute to employees as needed.
  • Review and implement your pre-planned action list.
  • Shut off utilities including electricity and natural gas.

 

Safety First
The goal for any business with regard to safety should be that none of its employees, vendors, customers or the public be injured, experience property damages, or be inconvenienced by an accident involving that business. In order to work toward achieving this goal, every business must have a commitment to safety, starting at the top of the organization. It is important that employees be trained continually about the hazard potential associated with their jobs regarding the risks to themselves and others. It is important to work closely with local emergency responders to keep them informed and up-to-date with respect to activities at the facility and the materials that are stored and used there.

Security Safeguard
Maintain wariness about your surroundings and teach your employees to observe and take notice of any unusual activities in or around your facilities. Impress upon them that they should not discuss characteristics of your storage or operations with telephone callers or unknown persons. Be certain that your facility is protected physically to the best practical level and have alarms for intrusion after business hours. During the business day, utilize technology and personnel to avoid any unauthorized entry or activities.

A Risk Management Plan
should address the following areas:
  • Maintain outside storage in an orderly manner. Do not allow debris and discarded items to accumulate.
  • Have materials available to protect glass doors and windows, along with the tools needed to install them.
  • Have important business records and compliance documentation secured in a well-protected dry environment. Consider having duplicates stored at another site.
  • Secure bulk tanks, vaporizers and pumps to concrete foundations that are in suitable condition.
  • Create a way to be able to communicate with employees after the event to plan for resuming your operation.
  • Maintain a supply of materials such as tarps to be used for temporary repair of roofs and other structural damage.
  • Have a predetermined site to relocate trucks and other vehicles out of the area of expected flooding.
  • Have established plans with customers to resume service to their locations with available communication avenues.
  • Coordinate with local police, fire and emergency response authorities to facilitate the protection of your property and the timely return to the facility.
  • Provide photo identification cards that include authorization for entry to employees who will be involved in the early return to the facility. Employees who may be involved in returning to recently flooded areas should maintain current vaccinations.

The security of vehicles is an extremely important part of a successful risk management program. Avoid leaving keys in cars, trucks and forklifts. When vehicles are not in use, lock keys in a secure location inside your building, especially after business hours. Drivers must not leave their vehicles running or leave the keys with the vehicle while making deliveries. Employees who drive company-provided automobiles or light trucks must also take appropriate precautions when the vehicles are parked.

As the utilization of electronic means for communication and transaction processing grows, it is imperative to protect the security of your systems. Backup data into separate storage to provide protection against information loss due to a primary system failure. In addition to duplicating files of your electronic data, it is appropriate to maintain duplicate files of any important documents in a separate location. The time and cost associated with replacing these items can be extensive.

Regulatory Compliance
Regulations deeply impact the costs associated with operating businesses, yet they are necessary to maintain a safe operation. An effective risk management program recognizes the necessity of being in full compliance with regulations involving OSHA, FDA, DOT, environmental rules and the rules and regulations of local jurisdictions.

Quality Quest
The loss of a customer or group of customers may be the most immediate risk that an organization faces. The reasons that such an event may occur are based upon a number of factors. Among these is a failure in the quality of a distributor’s performance. Quality may involve, but is not limited to, customer service, production performance, billing and documentation accuracy, timely delivery and compliance to specifications. You should evaluate the needs of your customers to ensure that their quality requirements can be met and are being met by your organization. The risk to your organization’s success is a potentially high one if the quality factor is not adequately addressed.

Operational Integrity
Operational integrity is an area in which the risk for injury and property damage is potentially high. The concerns in this area have to do with handling inventory, filling cylinders, utilizing proper procedures and methods, and maintaining equipment. You must make certain that storage racks, hoists, manifolds, valves, pumps, compressors, gauges, analyzers, scales, forklifts, dock plates and cylinders are properly maintained. Take steps to assure they are being used in the manner for which they were designed. All employees involved in the use of equipment and assets must be trained in their proper use, and they must fully understand that no shortcuts can be taken when it comes to the performance and use of this equipment.

Insurance Coverage
The reality is that it’s just not possible to eliminate all risks, and adequate insurance is required to protect your organization against the risk of a major loss. It is important to understand the exposures your business faces and the risk factors associated with these exposures.

Preparation Plan
Responding to the circumstances of a dramatic event can be more effective if you have a backup plan in place. Pre-determine options so that in the event of a catastrophe you can have access to delivery vehicles, to communications, to inventory and to a place to conduct business. You will need a way to obtain cylinders and gases and to record and track transactions. Unfortunately, not all catastrophes provide advance warning. The best way to mitigate the risk is to have good business practices in place. These include a strong safety program, appropriate training for employees, and a clean and orderly facility. Perform regular inspections of electrical systems and devices. Verify that burglar, smoke and fire alarms are operational and ensure that flammable materials are stored properly.

We all are hopeful that we will never experience catastrophic events like the hurricanes we have recently seen. Unfortunately, that is not the likely course of history. We can, however, take steps to minimize and, in some cases, eliminate, risks to our gases and welding businesses and to ourselves. Work to reduce risk through good business practices.

Gases and Welding Distributors Association
Doug Crayton Meet the Author
Douglas Crayton is senior vice president, risk management at Matheson Tri-Gas, Inc,. head-quartered in Parsippany, New Jersey, and on the Web at www.matheson-trigas.com.