Onshore Energy Conference — London Onshore Energy Conference — London | Page 21

CLAIMS SOLUTIONS

MECHANICAL RISK

MANAGEMENT
By Guillermo Lopez, Rimkus London

A

43% of major losses
over the last 20 years
were due to mechanical
integrity failures.

recent review of 100 major losses
over the last 20 years carried out
by the Lloyd’s Market Association
(LMA) revealed that 43% of all
major losses were due to mechanical integrity
failures. Of these failures, the single biggest
cause (81%) was found to be corrosion: either
internal corrosion, equipment corrosion or
the dreaded corrosion under insulation (CUI).
Failures of bolted joints and seals accounted
for the remaining failures identified in the
study. The report issued by the LMA with
these findings strongly advises risk engineers
to place a greater emphasis on mechanical
integrity during risk engineering surveys.
This leaves many risk managers and claim
managers, not to mention underwriters and
investors, wondering what the best strategies
are for assessing, quantifying and ultimately
managing this risk. Claim managers in
particular will be eager to learn the root
cause of the corrosion to determine its impact
on a claim. The party responsible for a loss
caused by corrosion is not always obvious.
Typically, the risk of corrosion is managed
during the design phase of a plant by careful
material selection based on the expected
operating conditions. In practice, a methodical
and carefully thought out approach to
material selection is undermined by huge
uncertainty on the composition of the process
fluid or in the actual operating conditions.
In addition, a hugely complex delivery chain
for plant equipment often means that the
origin of certain components, and their
materials, can never be truly guaranteed.
Once in operation, a rigorous Asset
Integrity programme carries the burden of
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