Brian Proctor, Risk Manager, Capital Power Corporation

1. Property Loss ControlCritical to Maintain Efficient OperationsORAdditional Work for Unforeseen Gain CONFERENCE PRESENTS Brian Proctor, Risk Manager, Capital Power Corporation David Thompson, Operations Vice President, FM Global

2. Setting the Stage: Business Basics Business Finished Products / Services Raw products Outside Services

3. Setting the Stage: Business Basics Costs Buildings Equipment People Sales / Customers Suppliers $ $ $ Value

4. Risk Management :Protecting the Value of your Business BUSINESS People Buildings Equipment Are all elements of the business equally Important to a well functioning Business?

5. Risk Management :Protecting the Value of your Business

6. Looking at the Loss Prevention Components People Buildings Equipment Safety Programs Emergency response Training Audits Succession Planning Efficiency Studies Maintenance Programs Emergency response Training Inspections Capital requirements Maintenance Programs Contingency planning Operator Training Inspections Life studies Performance monitoring When Times are tough where do we cut? What risks do we assume when we sacrifice programs and procedures?

7. What is a Highly Protected Risk? A highly protected risk (HPR) 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.

8. Where is your Business Today? Highly Protected Risk (HPR) Management Levels Company Wide Risk Management Strategy -Change management policy -Site level self audits of Loss Prevention Programs - Loss prevention Inspectors consult rather than evaluate - Superior HPR Level III Corporate Risk Management Strategy -Formal Loss Prevention Programs -Corporate evaluations to ensure compliance - External evaluators (FM or Broker) - Generally account is HPR Level II Purchase Insurance No Formal Loss prevention programs Inspection services report on conditions Generally Non -HPR Level I

9. What are the benefits of an HPR risk? What is Value? Operational Cash Flow Plus Growth Opportunities Offset by Financial Risk Business Sales / Customers Suppliers $ $ $ Value

10. Managing Financial Risk The Risk Quality Tie-in

11. Managing Financial Risk The Risk Quality Tie-in

12. Managing Buildings? • New Construction managed • Contractor Management • Maintenance of Fire Protection Equipment • Inspect Fire Protection Equipment • Manage Impairments • Housekeeping • Emergency response • TRAINING & EDUCATION

13. Managing Equipment? • Understand your Processes • Understand your Critical Objects • Understand Interdependencies • Preventative Maintenance • Operator Training • Contingency Planning • Life Studies

14. How do you figure out where you stand? • Assessment of current conditions • In House evaluations? • Outside evaluations? • Scope of Assessment • Fire? • Natural Catastrophe? • Equipment Hazards? • Breadth of assessment • All Facilities and processes • Strategic facilities and processes • Inside only • Supply Chain exposures

15. So you’ve done all that ….You know where you stand….You are on the path to HPR The Tough QuestionWhere does this path End?Are you there? If you are Congratulations…If you are not you have a journey to make Because…Assessment without Action is Bureaucracy

16. What is HPR for you? • What is your risk tolerance? • What are the business consequences of a loss? • These questions should help define your focus and actions. Not all Risks are Created Equally

17. So you now know1) where you are2) where you want to Go How do you get there? You need a vehicle….

18. Getting Corporate Support forProperty Risk management • Stakeholders • Corporate Management • Site Management • Employees • Risk Management

19. Corporate Management • Opportunities • Understand decision making (Use the right Language for your Culture) • Reliability • Profitability • Share Value • Safety • Share industry news that supports your initiatives • Be Innovative

20. Corporate Management • Challenges • Convincing Management that Loss Control adds Value • Deal whenever possible with proven solutions • Pre-planning of new construction

21. Site Management • Opportunities • Understand Local decision making process • Plan and communicate inspection protocols • Make sure they understand expectations Before, During and After inspections • Have exit interviews so no one is surprised when report issued • Attend and facilitate inspections whenever possible • Prioritize issues • Be a Resource for the Site You ARE Corporate and You ARE there to help

22. Site Management • Challenges • Convince Management that Loss Control adds Value • Recognize they are busy people and have other competing priorities – safety, environment, internal audit

23. Employees • Opportunities • Education and Communication are key • They need to Understand the Hazards • They need to Understand their Role • They need to be supported and supportive • They need to know their efforts are appreciated

24. Employees • Challenges • Apathy can destroy the best laid corporate plans • Momentum is difficult to create and harder to maintain • Success takes both management and employee buy-in and commitment.

25. Risk Management • Opportunities • Know what your Objectives are • Be realistic with your Objectives • Learn from the past – Do your homework! • Know your Peer Group outside your company

26. Loss Control – A Risk Manager’s Perspective Establish Your Credibility • Learn your business and the language • Get to know the plants, equipment types and technology • Work closely with the plant managers throughout the year

27. A Risk Manager’s Perspective Pre Site Visits • Ensure lots of advance notice, schedule of attendee’s, duration of visit and agenda sent ahead of time • Try for consistency with loss control representatives from broker and insurers – results are fewer repetitive questions and pictures • Ensure the loss control representatives are trained in your business.

28. A Risk Manager’s Perspective Site Visits • Make sure arrival of personnel is coordinated, on time and any security issues have been taken care of before you arrive • Document ‘action’ items by all parties and ensure follow up with an email upon return to office – no gaps. • Ensure exit meetings are conducted with the appropriate personnel in the room

29. A Risk Manager’s Perspective Report Review and Distribution • Review reports and compare to exit meeting notes to ensure accuracy of recommendations along with designated course of action • Reports to plant manager, corporate management and your broker’s loss control engineer along with priority rankings and comments – include any additional material • Don’t lose the momentum of the visit – the longer you wait to distribute the reports, the less chance in succeeding with implementation of the recommendation

30. A Risk Manager’s Perspective Follow ups • Ensure periodic follow ups are made with plant management. Works as a good reminder • Focus on the recommendations that all involved believe in. Support plant management in the budget process • Let’s admit - Some recommendations are not feasible and are not cost effective (need to be able to demonstrate a return for the monies spent). Work together for a reasonable alternative

31. A Risk Manager’s Perspective Selling to Senior Management • Understand the concepts that drive decision making within your organization • Understand the budgeting and budgeting approval process • Must be able to convince Senior Management that loss control adds value to the organization • Incorporate the human safety element in the conversation – people are generally perceived as more important than property

32. A Risk Manager’s Perspective Selling to Senior Management (con’t) • Be innovative – implement scorecard systems • Be willing to present at plant manager meetings • Become involved on advisory committees • Share industry loss information with management • Find a Champion and work with them – help them in selling concepts (such as strategic spares)

33. A Risk Manager’s Perspective Construction • Loss control really starts here! Establish standards in the bid documents. Easier to implement FM standards at this stage • Risk improvements more cost effective at this stage than trying to retro-fit an operating facility • Project management goals will always be different than operational management. Know which battles you want to win going into the project. Communication and $$’s will be key.

34. A Risk Manager’s Perspective Roadblocks in our Business • Focus has been moved from reliability to profitability. • Examples include extending maintenance outages, pushing machinery and equipment to their limits • Any cost benefit analysis on loss control initiatives must demonstrate that the expenditure will have a positive impact on the bottom line

35. Property Loss Control QUESTIONS David Thompson Vice President, Operations FM Global Email; david.m.thompson@fmglobal.com Brian Proctor Manager, Insurance Risk Management Capital Power Corporation Email; bproctor@capitalpower.com

36. THANK YOU FOR ATTENDING THE CONFERENCE ENJOY THE REST OF YOUR CONFERENCE!