The main objectives of the Risk and Opportunity and Knowledge Management department are to:
- promote the use of the Risk Management methodology for tenders and in the execution phase of projects managed by Business Units as well as on the Company’s principal investment projects;
- assure periodic reporting to management on principal project risks and on trends observed, aggregated by Business Unit and at global level and implement project portfolio analyses in order to support management decisions and provide an
understanding of the external macro risk factors on projects that may impact on company results so that Management can intervene by deploying the appropriate risk management tools of avoidance, mitigation, transfer and acceptance;
- assure the spread of a risk management culture within Saipem with a view to achieving structured management of risk and opportunity during business activities and contribute to improved management of contingencies;
- provide advice, support and guidelines to the Business Units and projects in identifying and evaluating risks and
opportunities and in all activities related to the implementation of mitigation and improvement measures for risk management and the optimisation of opportunities, respectively;
- define, develop and update tools and methods for collecting and organising lessons learned and making them available to projects;
- ensure adequate training and the necessary support to
Saipem Interim Consolidated Report as of June 30, 2013 / Risk management
- ensure the protection of Saipem’s intellectual property rights by monitoring the processes connected with the creation and filing of patents and the identification of distinct know-how that is to be protected, and by promoting the sharing and centralised collection of a corpus of Saipem’s intellectual property rights;
- ensure that Corporate Guidelines, Procedures and Standards are constantly updated in accordance with international Standards and Codes of Practice, promoting full compliance and correct application within Saipem and its subsidiaries;
- contribute to promoting the observance of the Golden Rules and Silver Guidelines, the tool for regulating risk assumption through which Saipem assigns management the responsibility for the decision to assume significant risks.
The Standards and Procedures in force at Saipem are in line with the principal international risk management standards.
Insurance
The Corporate Insurance function, in close cooperation with top management, defines annual Saipem Group guidelines for insurance coverage against the risk of damage to property, third party liability, as well as risks related to the performance of contracts.
An Insurance Programme is defined on the basis of the guidelines, which identifies specific excess and maximum limit coverage for each type of risk based on an analysis that takes into account claim statistics for recent years, industry statistics and conditions offered by the international insurance market.
The Saipem insurance programme is structured in such a way as to appropriately transfer risks deriving from operations to the insurance market, in particular the risks associated with the management of the fleet, equipment and other assets, including third party liability risks and risks deriving from the performance of contracts awarded by its clients.
Given the coverage that is offered by the insurance market and the changing circumstances on the energy market in which Saipem operates, it is not possible to guarantee that all circumstances and events will be adequately covered by the insurance programme. Equally, due to the volatility of the insurance market, it cannot be guaranteed that it will be possible in the future to reasonably maintain adequate insurance coverage at the current rates, terms and conditions.
Within the Saipem Insurance Programme, a distinction can be made between insurance cover for Group assets (‘Corporate insurance policies’) and the insurance cover connected with project execution.
Corporate insurance policies
The Corporate insurance programme is structured with an initial band of risk that is self-insured through a captive reinsurance company, with amounts in excess covered by a catastrophic insurance programme taken out on the insurance market.
The catastrophic insurance programme is composed of policies that cover damage to property, and maritime and non-maritime third party liability. Cover can be broken down as follows:
Damage to property
- ‘Fleet Insurance’ policy: covers the entire fleet against events that cause partial or total damage to vessels.
- ‘Equipment’ policy: covers all onshore and offshore equipment, for example site equipment, onshore drilling rigs, subsea Remote Operating Vehicles (ROV), etc.
- ‘Transport’ policy: covers transport, handling and storage of assets and equipment by land, sea or air.
- ‘Buildings and Sites’ policy: covers owned or rented buildings, offices, storage facilities and shipyards.
- ‘Other minor risks’ policy: covers minor risks such as theft and employee dishonesty.
Third-party liability
- ‘Protection & Indemnity’ (‘P&I’) policy: shipowners’ liability cover through a P&I Club that is part of the International Group of P&I Clubs, up to a limit of US $5.6 billion (with a sublimit for pollution of US $1 billion) for events occurring during transit, up to US $300 million for events occurring during offshore drilling operations and up to US $500 million for events occurring during offshore construction operations.
- ‘Comprehensive General Liability’ policy: covers all other types of general and third party liability claims arising from Saipem’s industrial activities and supplements the specific P&I coverage up to a limit of €400 million per event.
- ‘Employer’s Liability’ and ‘Personal Accident’ policies: these cover employer liability and employee accident risks, respectively on the basis of the specific regulations in force in each country where the Group operates.
A key tool in the management of Saipem’s insurable risks is the captive reinsurance company Sigurd Rück AG, set up and operational since 2008, which covers the initial part of risk, corresponding to €10 million per event for third party liability and
€15 million per event for all other classes of risk.
Sigurd Rück AG in turn carries out risk mitigation by re-insuring its portfolio on primary securities markets.
Project execution insurance policies
For all contracts awarded, specific project insurance coverage must be taken out. Generally, the contractual responsibility for such insurance lies with the client.
Where the responsibility lies with the contractor, Saipem takes out insurance that will cover all risks connected with the project for its entire duration.
Usually it takes out ‘Builders’ All Risks’ insurance, which covers the scope of work of the contract, i.e. damage to the works under construction, as well as to equipment, products and materials
Saipem Interim Consolidated Report as of June 30, 2013 / Risk management
required for its construction and third party liability for all works to be performed by the Group during all phases of project execution (engineering, transportation, construction, assembly, testing) including the contractual guarantee period.
The high insurance premiums and excesses on such policies are an incentive to Saipem in its efforts to achieve the continuous improvement of its prevention and protection processes in terms of quality, health, safety and environmental impact.
Saipem Interim Consolidated Report as of June 30, 2013 / Risk management