The Risk Landscape: What Puts Your Client’s Facility at Risk

Food and beverage sites typically combine high staff numbers, high levels of automation, temperature-controlled environments, often heat sources in the process, and large volumes of packaging and raw materials. These conditions can introduce a unique set of hazards, including: 

• Combustible dust from flour, sugar, spices, and powdered ingredients 
• High fire loads from packaging materials such as cardboard, plastic wrap, and wooden pallets 
• Refrigeration system risks, including ammonia or high-pressure CO₂ systems 
• Electrical exposure in wet, humid, or corrosive processing areas 
• Cooking or Heating used in the process and introducing ignition sources 
• Forklift charging or refuelling arrangements 
• Dangerous Goods such as flammable liquids and vapours 
• Maintenance and hot work activities that may introduce ignition sources 

When not properly managed, these risks can lead to fire, explosion, contamination, or extended production downtime—often resulting in financial loss and reputational impact.

Protecting Operations Through Proactive Risk Management 

A single incident in a food or beverage facility can disrupt supply chains, trigger regulatory intervention, and compromise product safety. Beyond physical damage, the cost of business interruption and lost customer confidence can far exceed the value of the assets affected. 

Proactive risk management supports: 

• Operational resilience and reduced downtime 
• Regulatory compliance and audit readiness 
• Lower insurance exposure and improved risk quality 
• Protection of staff, customers, and brand reputation 

Implementing proactive risk management strategies can take many forms. Some examples include: 

• Fire Protection Systems: Well designed and regularly tested sprinkler and fire water systems to protect assets and equipment. 
• Housekeeping and Dust Control: Routine cleaning and effective extraction systems to prevent dust buildup in processing and overhead areas. This improves food safety conditions and also helps reduce fire load in the vicinity of inception hazards such as forklifts or switchboards. 
• Electrical Safety Programs: Periodic inspections and thermal imaging to identify overheating or failing components early. 
• Refrigeration Safety Measures: Gas (leak) detection systems, emergency ventilation, and staff training for ammonia or CO₂ systems. 
• Controlled Maintenance Practices: Formal hot work permits and supervision to reduce ignition risks during repairs and upgrades. 

Building Confidence, Continuity, and Long-Term Growth 

In today’s competitive food and beverage sector, operational resilience has become a critical business advantage. A strong risk management approach not only protects physical assets but also safeguards production continuity, regulatory compliance, and the reputation that customers and partners rely on. 

By identifying occupancy hazards and implementing targeted risk controls, manufacturers can strengthen workplace safety, improve insurance outcomes, and maintain reliable operations. The result is greater confidence in daily operations and a stronger foundation for sustainable growth and long-term business success. 

@ Risk Underwriting interrogate underwriting submissions to understand how organisations are managing these occupational hazards. Our risk score process will provide premium benefits to those who are proactive in the way these risks are managed and our in-house risk management support can assist you and your client in efforts to improve risk mitigation for occupational hazards.  

If you feel that your client could need some support, let @ Risk partner with you and your client to enhance their risk management practices in a planned and proactive manner, delivering a return on investment through premium reductions once risk improvements are implemented.  

For more information and enquiries, please contact us.

Glycol – A Unique Risk to Raise with Your Clients

For brokers servicing clients in the food and beverage sector, understanding the operational role of glycol (more specifically food‑grade propylene glycol) is a unique way of showing you have an in-depth understanding of the wide range of risks that could be faced by your clients. Glycol is widely used due to its low toxicity, chemical stability, and suitability for food‑adjacent environments, making it the preferred option over other more hazardous chemicals. 

Why Glycol Matters to Your Clients’ Operations 

Clients rely on glycol as a secondary refrigerant in chilled-water and brine loops, where it functions by lowering the freezing point of system fluids. This enables refrigeration plants to operate safely at sub‑zero temperatures—critical for fermentation control, pasteurisation cooling, cold-chain integrity, and other temperature‑sensitive processes. Breweries, dairies, wineries and beverage processors depend heavily on stable glycol systems for product consistency and compliance. 

An Emerging Risk Area: Theft and Unauthorised Removal 

A less obvious but growing concern for underwriters and risk managers is the theft of glycol from industrial sites. Because glycol is often stored in drums or IBCs that are easily moved—and because stock levels fluctuate due to normal system maintenance—unauthorised removal can be difficult for operators to detect. The rise of informal markets that can use food grade glycol, including unregulated vape‑liquid manufacturing, can present an attractive source of revenue despite significant safety and legal implications. 

Implications for Brokers and Underwriting Conversations 

Brokers should consider raising glycol‑related risk controls with their clients during site surveys, renewal discussions, and pre‑underwriting reviews. Glycol mismanagement or theft can link to several insurance categories including property, liability, business interruption, and crime/theft exposures. 

Recommended Controls for Clients 

Strong site security controls significantly reduce both operational and insurance risk. Best‑practice measures include locked and/or access‑controlled chemical storage areas; strong perimeter security; documented chemical handling and transfer procedures; contractor supervision; CCTV coverage; and routine inventory reconciliation and record‑keeping. 

In any case, raising this unique risk with your clients will show that you have the finger on the pulse, and help build the level of trust they have with you.  

Feel free to reach out to the team to help understand how glycol could be a risk for your client’s facilities.  

Imperial Sugar Dust Explosion 

For food manufacturers, the danger isn’t theoretical—it’s real; it’s preventable, and it’s often overlooked. One of the most devastating global dust explosion events occurred in 2008 at an Imperial Sugar factory in Georgia in the United States. Unfortunately, 14 people lost their lives in this tragic event. This video explains what happens and is an excellent tool for understanding the risks associated with combustible dust.

Preventing the Disaster 

To manage the risk, we can break it down to focus on:  

• Eliminating the dust – ensuring the dust cannot reach “explosive” concentrations, and
• Eliminating the ignition source – remove any potential source of ignition from the area where dust may be present.

I only handle small quantities, is this an issue for me? 

Food industry operators who handle large quantities of grain, flour, or other fine organic materials typically understand the risk associated with combustible dust and the requirements to manage this hazard. For many that handle smaller quantities of these materials, it may not be as clear as what is required.  

The process of defining the hazardous areas in your facility, otherwise known as Hazardous Area Classification (HAC), is a good way of understanding where you have exposure to your facility.  

Understanding Hazardous Area Classification  

HAC involves identifying zones within a facility where explosive atmospheres may occur and determining the likelihood and duration of such events. Australian Standards such as AS/NZS 60079.10.2 govern classification in dust environments. These standards align closely with international frameworks like IEC and NFPA.

Dust environments are typically classified into the following zones:

• Zone 20 – Continuous presence of combustible dust in air under normal conditions.
• Zone 21 – Likely presence of combustible dust during normal operations.
• Zone 22 – Dust may be present, but only under abnormal conditions.

Classification considers dust properties such as particle size, moisture content, minimum ignition of energy (MIE), and explosion severity. 

Ignition Source Controls

• Electrical Equipment Certification: Use dust certified (Ex-rated) electrical equipment suitable for classified zones.
• Hot Work: Implement hot work permits, fire watches, and isolation procedures during welding, grinding, or cutting.
• Static Electricity Control: Apply proper bonding, grounding, and anti-static flooring to minimise static discharge.
• Mechanical Equipment Safeguards: Ensure moving parts such as bearings, conveyors, and motors are monitored to prevent overheating, friction sparks, or metal-to-metal contact.
• Surface Temperature Control: Maintain equipment surface temperatures below the minimum ignition temperature (MIT) of the dust.

Engineering Controls 

• Dust Collection Systems: Installation of enclosed dust extraction units at source points.
• Explosion Venting and Suppression: Use of vents and suppression systems to safely manage overpressure.
• Sealed Transfer Systems: Minimizing open transfers of dry material.
• Inerting: Introduction of inert gases like nitrogen to prevent ignition in closed systems.
• Temperature Control: Avoiding hot surfaces in equipment to stay below the dust’s ignition temperature.

Management and Administrative Controls 

• Routine Housekeeping: Scheduled cleaning to prevent dust accumulation on surfaces.
• Preventive Maintenance: Regular inspection of equipment to detect and repair leaks, corrosion, and overheating.
• Hazardous Area Inspections: Ensuring compliance with area zoning and equipment certifications.
• Training and Awareness: Staff should understand the risks, zoning implications, and appropriate behaviours.

How @Risk Underwriting Can Help

Hazardous Area Classification is a process in maintaining operational safety in dust-prone environments. Understanding how dust behaves, where it accumulates, and how it may ignite is central to mitigating explosion risks. Integrating traditional controls with digital tools strengthens proactive hazard management, enhances compliance with Australian standards, and most importantly, protects people, property, and production continuity.

@Risk Underwriting supports the clients by:

• Identifying dust hazards and ignition sources
• Implementing effective safety controls
• Ensuring regulatory compliance
• Protecting people, assets, and production

Our experts provide practical strategies for facilities of all sizes, helping you manage risk proactively and keep operations safe.

For more information and enquiries, please contact us.

Premium Reductions and Insurance Benefits 

When talking to brokers about sprinkler protection, the one question we are always asked is, “How much we will save on our premiums”. Our analysis indicates that the installation of sprinkler systems can result in insurance premium reductions ranging from 30% to 50%. Businesses and property owners who invest in these systems benefit from lower premiums, and when we factor in that these savings are locked in each year moving forward, this can translate into considerable long-term savings. Additionally, properties with sprinkler systems often experience faster recovery times after a fire, reducing business interruption losses—another key consideration for both insured and insurer. 

The High Capital Cost and Payback Period 

Despite the clear insurance benefits, the cost of installing a sprinkler system remains a major financial hurdle for your clients. Depending on the size and type of property, the installation cost can be substantial, often requiring significant upfront capital investment. Based on our analysis, the payback period for sprinkler installations, when considering insurance premium savings alone, typically falls within the range of 7 to 10 years. Purely as a Capex hurdle for an investment decision, this doesn’t hit the mark for most organisations. This extended payback period means that your clients must weigh the long-term financial advantages against the short-term financial burden. 

Other Benefits 

Beyond insurance savings, there are other compelling reasons to invest in sprinkler protection that need to be factored into this cost benefit. A particular benefit that we always emphasise is the protection of your client’s market share. Protecting a key asset with sprinklers can mean that the operational response to fire events is quick, meaning that interruption of supply to customers is minimised, if not eliminated. Where this is the case your clients will avoid providing competitors with an opportunity to consume their market share. Sprinklers can also enhance property value and attract tenants who prioritize fire safety. For your clients, minimizing fire-related disruptions can preserve reputation and operational continuity, further justifying the investment. 

Conclusion 

While the high capital cost of installing sprinkler systems can make the decision challenging, the long-term benefits—particularly in terms of insurance savings, limiting interruption, protecting market share, and regulatory compliance—make it a worthwhile consideration. For your clients that take a long-term outlook, the investment in sprinkler protection provides not only financial advantages but also enhanced safety and resilience against fire-related losses. Ultimately, understanding both the cost implications and insurance benefits is key to supporting your clients in making an informed decision about fire protection investments. 

For more information and enquiries, please contact us.

Dubbed as the “forever chemicals” and “the next asbestos”, PFAS is a large group of complex synthetic chemicals that has been used in various consumer products since the 1950s. PFAS is broadly used in the manufacturing of water resistant, stain resistant and non-stick goods that are used in a range of applications from Gore-Tex materials and anti-adherent pans to firefighting foams.

Risk Factors

The main risk factors with PFAS are:

• Widespread historical use: PFAS has been widely used in consumer products for more than 50 years and can now be isolated from various environmental and food samples.
• Environmental persistence: Due its very stable chemical structure, PFAS molecules does not degrade in the environment and continues to persist, hence the name “forever chemicals”.
• Health effects: Even though the understanding of the health effects of PFAS is currently incomplete and fragmented, the exposure has been linked to health issues such as low birth weight, thyroid issues, testicular cancer and increase in cholesterol among many other symptoms.
• Bioaccumulation: PFAS molecules cannot be metabolised and hence slowly build up in the body of animals over time, which further increases the potential health risks.

The next asbestos?

Similar to asbestos, the widespread use and persistence of PFAS in our society makes the scale of PFAS exposure and its potential financial impact through litigation quite significant.

PFAS exposure has been linked to several health issues however, the science is far from settled on this matter. Unlike asbestos, where the connection between historical asbestos exposure and the diagnosis of mesothelioma cancer was established and accepted, there is no “signature” disease that is linked to PFAS. Hence the current litigations are full of questions regarding scientific causation and evidentiary standards governing liability. For further reading on the comparisons of asbestos and PFAS and its potential on the insurance industry, refer to the article here, and for information on current ongoing PFAS litigations, read this article.

Current Regulation

The regulatory landscape of PFAS is rapidly changing with several countries imposing bans or voluntary approaches for minimising the manufacture, import, sale and use of PFAS. Example is the EU REACH proposal in 2023 that requires PFAS restrictions to be effective in 2026. For more information, refer to the article here.

PFAS Litigation

As always with litigation, the USA is leading the way. The first PFAS related case was brough in 1999 and to date there have been more than 10,000 cases involving more than 500 companies. Known settlements now exceed more than $16 Billion for property damage, environmental damage and health impact claims. The two companies impacted the most are Dupont (manufacturers of Teflon) and 3M (manufacturers of AFFF foam for firefighting).

Insurance Implications

The presence of PFAS has the potential to create a range of insurance issues:

• Liability exposures – claims for environmental damage or health impacts where a direct link can be made between a contaminated product and the effect.
• Environmental Impairment – particularly an issue where policies are in place and regulations tighten requiring clean-up to occur.
• Product Recall and/or Business Interruption – contamination found in a product may require the product to be recalled and/or replaced leading to significant loss of sales.

Brokers and clients should be conscious of the presence of PFAS exclusions.

At present @Risk Underwriting does not have a standard PFAS exclusion but can apply it based on underwriters’ judgement.

For more information and enquiries, please contact us.

What is a Firewatch? 

A firewatch is a trained individual assigned to monitor hot work areas during and after operations. Their primary purpose is to detect sparks, heat, or smouldering materials that could ignite nearby combustibles. Standards such as AS1674 mandate that a firewatch must: 

• Remain on duty during hot work wherever fire hazards are present, including combustible materials within 10m. They cannot be assigned other duties that distract from observation. 

• Stay after work ends, maintaining watch for at least 30 minutes, and in some cases up to 4 hours, to ensure no delayed ignition occurs. 

• Be trained to recognise hazards, understand hot work permit systems, operate fire extinguishers, raise alarms, and initiate emergency response. 

• Be equipped with appropriate firefighting equipment (portable extinguishers), PPE, and reliable communication tools. 

• Cover all hazard zones. If sparks can travel through walls, floors, or ducts, additional firewatchers must be assigned to each affected area. 

• Have authority to stop work immediately if unsafe conditions arise. 

The presence of a firewatch is documented on the hot work permit, and failure to provide one is a common issue identified in an inferior hot work permit process. Similarly, often the person assigned the responsibility of a firewatch does not understand their role and, therefore, does not carry out this role effectively.  

Challenges and the Role of Video 

While the firewatch is essential, there are practical challenges. Having someone present for a 4 hour period post work is not a practical solution in many instances. As a recent innovation, video surveillance has been adopted as an additional control for this problem.  

Modern video-based firewatch systems use fixed or mobile cameras to provide: 

• Continuous surveillance without fatigue, extending beyond the minimum monitoring period. 

• Thermal imaging to detect heat or embers invisible to the naked eye. 

• Real-time alerts using AI analytics to identify sparks, smoke, or abnormal heat conditions. 

• Documentation of hot work activity for compliance audits and investigations. 

A hybrid approach is increasingly considered best practice: a trained firewatch remains physically present to take immediate action, while video monitoring provides additional oversight and coverage of multiple or hard-to-access areas. 

Conclusion 

Hot work fires remain a significant safety risk, but adherence to standards through a properly trained and equipped firewatch dramatically reduces the likelihood of incidents. When enhanced with video technologies, organisations can strengthen compliance, reduce human error, and add a second layer of protection. In modern high-risk environments, combining traditional firewatch practices with video-based monitoring offers the most effective strategy for managing hot work safely. 

References: 

• NFPA (2020). NFPA 51B: Standard for Fire Prevention During Welding, Cutting, and Other Hot Work. National Fire Protection Association. 

• Standards Australia (1997). AS/NZS 1674.1: Safety in Welding and Allied Processes – Fire Precautions. 

For more information and enquiries, please contact us.

Why Recalls Matter

In today’s regulatory and consumer environment, product recalls are becoming more frequent and more costly. Whether caused by contamination, mislabeling, or safety defects, the financial and reputational consequences can be severe. Direct costs are only part of the challenge — businesses must also deal with lost sales, damaged relationships, and a hit to brand reputation.

Two Options for Coverage

Product Recall Expenses Extension

This is an endorsement that can be added to a standard product liability policy. It typically provides basic protection for the immediate logistics of a recall, such as:

• Transport, storage, and destruction of defective products
• Notification of regulators and customers

However, it comes with important limitations. These extensions usually do not cover loss of profits, replacement stock, crisis management, or the financial losses of third parties. Limits are often modest — sometimes only $100,000 to $1 million. For businesses facing large-scale recalls, this cover can leave significant gaps.

Standalone Product Recall Insurance

A standalone policy is designed to respond comprehensively to recall events. In addition to the direct costs above, it may also cover:

• Business interruption and loss of gross profit
• Cost of re-manufacturing and redistributing stock
• Third-party financial losses (e.g., retailers or distributors)
• Crisis management consultants and PR support
• Brand rehabilitation campaigns

Limits are higher and can be tailored to the business risk profile, making this option suitable for industries with high exposure such as food & beverage, pharmaceuticals, automotive, and consumer goods.

A Real-Life Example

Imagine you’re a food manufacturer. A batch of frozen meals is contaminated with undeclared allergens. Suddenly, 200,000 units across the country need to be recalled.

• With just an extension, you’d get help collecting and destroying the meals — but you’d be on your own for lost profits, retailer claims, and brand damage.
• With a standalone policy, you’d also get financial support for new stock, crisis management consultants, and a brand recovery campaign.

One protects your balance sheet. The other protects your whole business.

If your business faces high recall risks, it’s worth asking: do you just want cover for the basics — or for the survival of your brand?

How Much Insurance Should Food Companies Buy?

This is one of the most common questions and the answer depends on a mix of risk exposure, supply chain relationships, and financial resilience. There’s no “one-size-fits-all” answer, but we find that most people do not purchase the worst case scenario limits. Here’s how we usually think about it:

Factors That Influence the Right Limit

1. Revenue / Turnover: Larger companies (>$100m turnover) generally need much higher limits to match their exposure.
2. Distribution Scale: National or international distribution increases recall costs dramatically compared to local-only businesses.
3. Retailer Contracts: Many major supermarkets (e.g., Coles, Woolworths) expect suppliers to hold recall cover — they do not specify limits like general liability.
4. Facilities: Understanding the products manufactured at what facilities, on how many production lines and what batch sizes.
5. Regulatory Environment: FSANZ and global allergen/labelling standards mean even minor errors can trigger expensive recalls.
6. Supply Chain Complexity: If your product is an ingredient in someone else’s food, a recall could escalate into multi-party claims.
7. Brand Sensitivity: Premium or well-known consumer brands face higher reputational exposure, so higher limits are prudent.

Benchmarking Rule of Thumb

Work with your client to run recall modelling (scenario planning). This helps estimate realistic recall costs for your product portfolio. But in short:

• Small food and beverage companies: $1m–$5m
• Medium: $10m–$20m
• Large/national/export brands: $30m–$50m+

Reassess limits regularly — turnover, distribution, and retailer demands change over time.

The right limit is ultimately about protecting your business from a recall event that could otherwise threaten its survival. It could be as bad as having a fire that destroy’ s your facility.

For more information and enquiries, please contact us.

Given the fact that BI or Section 2 losses of ISR claims account for a significant portion of most claims, a good BCP can be a great tool to give underwriters comfort that an insured understands the risk and would navigate an incident successfully.  But like many risk management processes, BCPs can be good or bad.  We review these plans for clients all the time and it is fair to say, what we find is wide and varied in terms of the standard and depth of the plans developed. Many are crisis plans, not continuity plans, many have come straight from Chat GPT!

What we find is that very often people get mixed up in the terminology. Confusing crisis plans and disaster recovery plans with business continuity. The graphic below helps with this. To be clear BCP is about handling interruptions to the operations. To make this even simpler it is how businesses ensure they can get their products to customers when an adverse event has occurred.

The Importance of Business Impact Assessment (BIA)

A Business Impact Assessment (BIA) is a foundational step in developing a robust BCP. It involves analysing a business through the whole supply chain to determine the potential impact of disruptions on operations, financial stability, and customer service.  Done properly, it starts with suppliers, identifying those suppliers that may cause delays if they have an issue. Then we step through the production process to identify bottlenecks or vulnerabilities that could slow or stop supply to the customer.

The best tool to use is a process flow diagram when stepping through a BIA. So if we see this in a BCP document it gives some comfort.

Key Components of a BIA:

1. Identification of Critical Functions – The BIA identifies essential business processes that must be maintained during a crisis.
2. Impact Analysis – It assesses the financial and operational consequences of disruptions, helping organizations prioritize recovery efforts.
3. Recovery Time Objectives (RTO) and Recovery Point Objectives (RPO) – These metrics define acceptable downtime and data loss, guiding the development of effective recovery strategies.
4. Resource Assessment – The BIA determines the resources, including personnel, technology, and third-party support, needed to maintain operations.

By conducting a thorough BIA, organizations can tailor their BCPs to address vulnerabilities and ensure timely recovery from disruptions.

Developing an Effective Business Continuity Plan

The BIA will identify the critical processes. The BCP then defines detailed steps to implement for each of these critical processes assuming they are interrupted. Importantly, the cause of the interruption is irrelevant. Fire, flood, product recall, it doesn’t matter. The process is not available, how do we continue to supply customers.

The options for managing the interruption will of course depend on the scenario but can include moving production to alternate production facilities or outsourcing to third parties.  The insured may need to manage existing stock, for example more critical customers may be prioritised for delivery and others delayed.

Continuity Plans typically have two streams of activity and resources should be allocated accordingly:

1. Reinstatement – an appropriate level of resource needs to be applied to rectifying the cause of the interruption and reinstating supply, and
2. Continuity – maintaining supply to customers.

Conclusion

A BCP is a document we hope our clients never have to use.  A good one will minimise disruption and could actually be a competitive advantage if the crisis affects others in the same industry. We often get asked for a template, and sure there are templates available, but a proper process ensures there is a deep understanding of the interruption vulnerabilities, which will ensure businesses are better prepared to respond.

For more information and enquiries, please contact us.

Food safety is a top priority for any food producer, but it doesn’t always mean that a public recall is the only solution. When managed with precision and expertise, potential crises can be transformed into manageable risks. Our recent collaboration with a well-known dips producer demonstrates how timely engagement with the right professionals can protect both consumers and the business, avoiding unnecessary costs and reputational damage. 

A leading producer of retail dips—known for their commitment to quality, safety, and innovation—faced a serious challenge when routine testing flagged a batch with preservative levels exceeding regulatory limits. Concerned about consumer safety, the company halted distribution and prepared a full-scale recall, which could have cost over $300,000 and damaged their brand reputation. 

Before taking that step, the client engaged our expert team for a rapid risk assessment. We conducted a thorough review of the data and consulted an independent toxicologist, who confirmed the preservative levels, while above the threshold for that product type, posed no significant health risk. 

As a result, the client avoided the costly recall and potential reputational fallout. Further testing validated the product’s safety, allowing it to remain on shelves and maintaining consumer confidence. 

Key outcomes: 

• Avoidance of an estimated $300,000 in direct recall costs  
• Prevention of reputational damage with consumers and retailers  
• Strengthened internal food safety response protocol  
• Improved supplier confidence in the client’s risk management strategy 

This case highlights the value of early expert intervention and informed decision-making in managing food safety risks efficiently and effectively. 

At @Risk Underwriting, we bring a team of experts who specialise in navigating the complexities of food safety and risk management. We don’t just provide solutions—we ensure your business stays compliant, minimising risk and protecting both your reputation and bottom line. With our deep expertise in food and beverage underwriting, you gain a trusted partner who helps you manage and mitigate food safety risks at every step of the process. 

For more information and enquiries, please contact us. We are here to help you navigate the complexities of food safety and ensure your products remain safe and compliant.