Major disasters like Bhopal, Chernobyl, Challenger, Flixborough and Pasadena could have been avoided through proper perception of the risk potential, said Allianz Alpic Industrial Risk Management Services Ltd CEO RR Balakrishnan.

Presenting an overview on risk management inspection, Balakrishnan said the plant designers and management should concentrate on safe operational procedures, emergency systems and greater understanding of the risk and safety precautions.

To contain failures, the equipment must have a high degree of containment with in-built safety systems, emergency preparedness and automatic protection of equipment, he added.

The risk manager should present his assessment rationally to enable the management to control the residual risks and transfer the risks to the insurers, he said.

General Insurance Corporation of India chairman DSengupta said that assessment of various types of risks along with appropriate risk management and risk transfer are necessary to ensure survival and uninterrupted earnings.

Speaking on positive risk management, Arthur Andersen's Mark Ward said there was an urgent need to try and bridge the gap between the business risks and the capability to manage those risks.

Positive risk management would mean better foundation for setting strategy, increased likelihood of achieving goals, reduced cost of capital and increased shareholders value. Assessment of the critical issues and development of risk solutions with a culture of continuous improvement is necessary, he added.

Talking about the Indian insurance market - both life and general - Ward said with 900 million potential customers and a five to six per cent rate of GDP, it offered an attractive market. There are also challenges partly from within the domestic market, and more from outside and with the WTO financial services pact and Insurance Regulatory &Development Authority Bill, risk and value creation are inseparable.

Ward said understanding the profits, preparing to pay for risk management, investing with authority, reconciling with diligence, tracking the cash flows and respect for business quality are among the 10 commandments of success.

Speaking on the alternative risk transfer concept, Swiss Insurance Company's Kai-Uwe Schanz said that ART is necessary for liability crisis and maintaining surging catastrophe losses, which lead to capacity bottlenecks and volatile prices.

Overview of the ART solutions include captive insurers, finite risk, integrated covers, multi-trigger products and capital risks. ART in Asia would be the drivers of future growth, he said.

Improving risk management skills, understanding the dynamics of risk landscape, deregulation of direct insurance, corporate restructuring, fair value accounting and the monitoring role of shareholders value would be the basis of strengthening the ART business, said Schanz.