Drive Towards Centralisation and Distribution Efficiencies Exposes Businesses to Greater Fire Risks

As businesses drive towards greater centralisation of property assets and distribution efficiencies, the need for more stringent fire protection engineering increases significantly.  However, a review of recent fire catastrophes and business shutdowns by authorities due to non-compliance with fire regulations suggests that many businesses – small and large – are ill-prepared when it comes to preventing an unexpected and potentially devastating fire, let alone managing the consequences thereof.  

Despite the fact that many websites such as are providing training to people on how to operate heavy machinery and explicitly teaching what one should do in case of a fire, not all business in the past sent their employees through this type of necessary training. This form of extensive training in recent years has gained a tremendous amount of importance and very soon shall be made mandatory in various business according to a recent analysis.

David Vines, Managing Consultant at Aon South Africa’s Risk Control and Engineering unit says that hazards such as fire can be addressed and mitigated by having thorough fire protection plans in place.    

“Fire is often an underestimated risk, particularly in South Africa and yet we have a number of fire-prone areas such as large industrial sites and warehousing complexes which potentially pose conflagration risks due to the exposure of closely situated site buildings. We’re seeing a growing trend whereby businesses are centralising their distribution points or hubs as part of a cost-saving or streamlining process in supply chain management.  This in turn means the fire risk is so much greater as much larger volumes of stock and equipment are housed in one area.  The risk also increases incrementally by having all their ‘eggs in one basket’ syndrome, so to speak.   

“A fire can wreak havoc on business operations and the costs arising out of the loss of assets and business interruption can amount to millions of Rand in damages.  This does not even begin to take into consideration the risks to human life and liabilities that can arise,” says David.  Failure to comply with the statutory requirements and codes of practice for fire protection can leave business stakeholders in severe financial crisis and with potential legal implications.  

“By asking the right questions, exploring options, and carefully considering the ‘what ifs’ of existing and future requirements, no matter how seemingly unlikely, a professional risk consultant is able to produce safe and technologically-efficient system solutions based on proven expertise.  When it comes to fire engineering, services may include, but are not limited to, fire protection, suppression and fire alarm system evaluation and design.  Aon Global fire protection engineers are also highly experienced in smoke hazard analysis by utilising computer-based programmes that analyse fire and smoke behaviour.  

“Having a practical knowledge of building codes, fire codes as promoted by the National Fire Protection Association, Factory Mutual, Automatic Sprinkler Inspection Bureau and SANS sprinkler rules; as well as knowledge of construction materials, manufacturing processes and storage practices and the relevant hazards involved therein, along with insurance industry best practices, benefits our clients in numerous ways throughout the completion of any fire engineering project,” explains David.  

“The cost of non-compliance with fire protection rules is massive when one considers the financial repercussions and potential reputational damage if there was a loss of life – think in terms of losing a major client or business as a result, lost profits and operational delays.  Businesses ignore fire safety standards at their own peril,” explains David.

And finally, an experienced broker’s advice is invaluable when it comes to having the right insurance covers in place to cover your business for worst case scenarios, both in terms of assets and business interruption. “Underinsurance should be avoided at all costs otherwise the business stakeholders could find that the law of average will see them paid out significantly less than what the business premises and insured equipment is actually worth.  It is recommended to have an independent professional valuation carried out on buildings, plant and machinery at least every three years, with plant and machinery being considered the most important due to the impact of fluctuating exchange rates and inflationary pressures on replacement costs,” concludes David.

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