Cargo at rest is cargo at risk. We have all heard this phrase in relation to protecting goods in transit against theft. When cargo is delivered and becomes inventory (stock), it is then (mostly) at rest. With the proliferation of stock through-put insurance policies – offering insurance customers seamless coverage from creation to destination – it is vital to understand the risks and exposures during storage periods.
There are of course risks in common – such as storms – but unlike a ship, a warehouse cannot move out of harm’s way. A proactive risk assessment can point out storage location vulnerabilities or inefficiencies. Such an assessment should incorporate essential COPE (Construction, Occupancy, Protection and Exposure) elements. In addition, the assessment should address stock specific questions such as:
- What are the inbound receiving and outbound shipping procedures?
- What inventory handling and storage systems are in place?
- How is inventory managed/tracked?
- How is the location protected against natural hazards?
- What fire protection systems are in place?
- What security systems are in place?
- Does the facility have any disaster response plans?
- How is the facility staffed?
The nature of the goods and specific vulnerabilities such as whether or not goods are theft attractive, prone to infestation, or have temperature control requirements will guide possible further evaluation:
- A deeper dive into security: physical, systems and personnel practices.
- What checks are performed at delivery to ensure there is no infestation present? What pest control measures are in place at the facility?
- A deeper dive into refrigeration, back-up systems, response plans.
Once the risks are identified and the existing protections are understood, stakeholders are able to make more informed decisions. Incorporating robust risk management strategies positions marine insurers and their customers for success.