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SONAR 2021 identifies restarting of mothballed facilities as the largest short term emerging risk

The Swiss Re Institute has published its SONAR 2021 which provides a wide-ranging analysis of emerging risks. The report finds that COVID-19 shaped the top two emerging risks this year.

The top emerging short term risk is the immediate danger from bringing mothballed facilities back online. Missed inspections and delayed maintenance increase the risk of larger accidents as operations resume at oil refineries, chemical plants, mines or power plants, says the report. The second big threat are ‘zombie’ companies, which are unviable firms that stayed afloat thanks to COVID-19 support but may go bankrupt once pandemic relief ends.

Looking further ahead, the report considers the threats engendered by climate change and threats related to increasing human-machine interactions.

Mothballed facilities

Elaborating on the threat from mothballed facilities the report says that:

  • Keeping plants and processes safe requires ongoing maintenance by experienced and qualified staff, and time and finance to support shut-down activities with subsequent restorative and safety work. If one of these asset integrity pillars is impaired, high-consequence leakage and/or equipment failure scenarios could lead to catastrophic loss events like fires, explosions or the release of toxic materials into the environment. The result could be multi-billion losses for the insurance industry.
  • The COVID-19 pandemic experience has also put maintenance and inspection work under pressure. This is due to lack of availability of contractors and equipment /material. A consequence of a global economy in trouble has been a squeeze on maintenance budgets in many industries, and a delay to planned works. In the oilfield services sector alone, there was a USD-20-billion cut back in maintenance budgets last year. And across many industries, as a savings measure, the choice has been to mothball facilities rather than use the downtime for maintenance. In addition, qualified and experienced staff have either been laid off and/or, due to restrictions on mobility in lockdown, not able to travel to sites of work.
  • From a risk perspective, experience shows that the start-up phase of a mothballed facility can be the time of most acute risk. Studies indicate that in the refining, petrochemical and chemical industries, around 40–50 percent of process safety incidents and/or major losses occur during start-ups after a period of shutdowns and other events that occur infrequently. There is a risk that the start-up of mothballed facilities after the pandemic-induced interruption may take place under budget pressure: in other words, an environment in which approval for fast but not necessarily well-planned or well-resourced start-up is given.

More details.



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