The fundamental premise of Insurance is to be able to accurately assess the risk of financial loss associated with the given policy constraints. In the instance of drones, there are three key pillars that dictate risks – Human, Technology and Operations. Precision Autonomy’s Risk Management Framework separates these key pillars into individual metrics, which make up a complete picture of a given risk.
This week, we dive into the Operational element of risk assessment.
Drone Operational Risks
While the Human and Technology pillars are two key components, the operational aspect of flying a drone is the area which encompasses the actual manifestation of risk. A pilot can have all the skills in the world, however if they’re unable to manage the environment operationally, this can lead to unnecessarily high risk. Similarly, the technology can be the most sophisticated, having market leading hardware and software, but if it is flown in the wrong weather, with gusting winds and unpredictable rains, this gives rise to almost insurmountable risk.
Here are three areas which make up a small part of the operational environment, and their associated risks.
The weather, as something that is entirely out of control of the operator, is something that obviously affects operations and risk. Choosing to operate in inclement weather conditions, whether it be excessively hot or cold, windy, raining or otherwise, is a decision that is not only under the control of the operator, but also adds to the risk.
If we were to have two hypothetical companies, with pilots of the same skill level, the same history, and operating the same drones; Company one decides to operate in inclement weather, due to the demands of the client, whereas Company two holds off to operate in favourable conditions. Company one should therefore have a much higher risk profile and resultant premium because, compared to Company two, they are objectively exposing their drones to more risk.
The surrounding environment
Each environment is inherently different. For this reason, a key aspect of the operational risk management is the ability to accurately assess the environment, and make decisions to mitigate these risks. Being able to manage the surrounding environment is largely a matter of situational awareness. A really common example of claim for drone accidents are through eagle attacks and other bird strikes. Whilst this appears to be bad luck as the result of an aggressive bird, this can largely be anticipated ahead of time and its risk mitigated by proper flight planning and pilot action. Being aware of the presence of the bird and its propensity to attack is one aspect of environment assessment.
Another surrounding area risk that continues to pop up is operations in remote areas, particularly in agriculture. A number of operators believe that operating in a remote area, away from people and buildings corresponds to a low risk of liability exposure. Whilst the lack of immediate danger is true, a drone crashing in a remote area, particularly with crops, forests or kindling nearby, has the very real risk of causing a bushfire or crop damage.
For this reason, the proven ability to reduce the risk of the surrounding environment should be considered when assessing the risk profile, and operators who can prove that ability should be rewarded with lower premiums.
The type of operation
Similar to each environment, each type of operation has different risks. For instance, operating a Phantom 4 over the ocean may be a relatively low risk for personal injury and property damage, in comparison to a Matrice 600 Pro, mapping a council construction site with 100 workers.
Each type of operation should also carry with it an appropriate risk assessment, and its premiums should be reflected by the type, complexity and risk.
Bringing it together
While the Human and Technological risk pillars of Precision Autonomy’s Risk Management Framework create the very real insights the Pilot and equipment utilised, the Operational pillar brings the risk into its most tangible light. In the operational environment, the skills of the pilot can prevent or cause crashes, and technology can either assist the pilot, or it can contribute to the risk. When creating a risk profile, Precision Autonomy’s Risk Management Framework assesses these risks based on each individual factor, and weights it against the overall scheme of risk. The ability of the operator, the organisation and their use of technology to assess and mitigate risk in the operational environment, should be fairly rewarded with a greater rating and over time, lower premiums.