IoT Is Letting Your Elevator Talk to Your Air Conditioner; And That’s a Good Thing
If you will agree with me that risk emanates in part from the unknown, then you might also agree that as we fill in the gaps of our awareness, we naturally have the ability to better manage certain risks.
As an employee of one of the world’s largest technology enterprises, I have the luxury of witnessing so many fascinating inventions, innovations and transformations in technology. Being an “insurance person” and a risk manager, I am always observing these developments from the insurance perspective.
The Internet of Things and specifically the “instrumented workplace” has been one of the areas that has really intrigued me as a fertile area risk managers have not quite caught onto in full.
Without a question, there are risks around security and privacy that have been discussed, but I’d like to reinforce the risk management benefits of the new and more complete insights IoT affords.
As assembly lines, heavy equipment, air conditioners, elevators, escalators and equipment of all types get more instrumented, businesses and specifically the COO benefit: His/her staff are now able to use these insights to take preventative measures to avoid mechanical breakdown using predictive maintenance practices.
Companies like IBM offer Predictive Maintenance and Optimization services that incorporate IoT and IBM Watson artificial intelligence to help businesses avoid interruptions and optimize their processes. Manufacturers like Siemens provide predictive maintenance services, and companies like Kone are taking this a step further and using these capabilities for strong marketing and competitive differentiators.
Kone even has a website enabling viewers to listen to its elevators across the globe talking to one another.
But just as the COO benefits as he/she is chartered with keeping the plant up and running, the risk manager is the one managing business interruption risk in part through the purchase of BI insurance. Why wouldn’t these new insights play a significant role in setting self-retention limits as well as fuel powerful conversations with the firm’s broker(s) and primary carrier(s)?
Let’s not overlook workers’ compensation too. If a system breaks down, and workers then have to behave differently than normal, exposure to injury skyrockets.
I argue that avoiding the breakdowns — especially partial breakdowns — also has a positive impact on product liability exposure and to some extent directors and officers liability.
But it doesn’t stop there. In a retail setting, for instance, think about how avoiding mechanical breakdowns helps mitigate other liability exposures. Escalators breaking down inevitably increases trip and fall exposures, especially in the first few moments of the interruption.