Reaching the summit of highly protected corporate risk management levels

A modern business might fit into any one of three highly protected risk (HPR) management levels, according to David Thompson, vice president and Toronto operations manager of FM Global.
“A highly protected risk is a location at which all reasonable physical and human element loss prevention measures have been implemented to protect buildings, equipment and contents from all losses, including those caused by natural hazards, and change is being managed proactively to maintain this status,” Thompson told delegates during a session at the 35th Annual RIMS Canada Conference in St. John’s, Newfoundland.
“In a beautiful world, a highly protected risk is [when] you’re basically doing everything you can do to protect your assets. That’s a beautiful world.”
Businesses at Level 1 basically buy insurance and don’t have any formal loss prevention programs in place, he noted.
Inspection services are generally there to report on the conditions, not to give advice on how to improve conditions, he added.
“Generally speaking, from my perspective, these aren’t highly protected risks, these are just pure commodity type risks that get floated out into the marketplace,” Thompson said.
Level 2, which makes up the general bulk of Thompson’s business, is what he dubs the ‘corporate risk management strategy.’
At this level, risk managers have incorporated into their business practices a formal thought process related to how the company is going to manage risk.
At Level 2, a company has standards for formal loss prevention programs. Corporate evaluations are done internally to ensure compliance to these standards.
Inspection services confirm whether or not the sites are performing up to the company’s standards. 
“This is a pretty good place,” Thompson said of Level 2. “If you’ve got this as a risk manager, you’re in a pretty good zone. You kind of know what your risks are, and you’re proactively trying to deal with them.”
Level 3 is what Thompson calls the ‘company-wide risk management strategy,’ because it is a philosophy that isn’t a corporate philosophy pushed down by the executive level. Rather, it’s a cultural philosophy embedded in the company from the operations level right up to the C-suite.
“There’s a few of these out there,” Thompson said. “It makes my life easier as an underwriter because these companies really take a lot of time and a lot of effort to try and understand what their risk profiles look like.”