16 December 2014 – Risk expertise and analytics provided by Lloyd’s insurer Amlin is helping Formula E race team Amlin Aguri develop a winning strategy, according to Peter McCool, Technical Director of Amlin Aguri. (source: Lloyd’s of London)
How important is managing risk in a sport like Formula E?
This is a potentially dangerous sport that requires a sensible and level headed approach. Safety is a top priority, but it is also about being prepared for race day. In Formula E, practice, qualifying and the race all take place on the same day, so the team, drivers and cars must be ready or risk missing out.
How does Formula E differ from other motor sports?
All motor sports are potentially dangerous, but with Formula E the main difference with the cars is that they use high voltage electricity storage. We have all been on an FIA approved safety course to understand the risks of using these batteries. In addition, all the races take place in the centre of major cities that are mostly new to motor sport, which brings its own risks and challenges.
Can the management of risk give a team a competitive advantage?
It most definitely is a competitive advantage. This is a high risk and high pressure sport, so managing risk by being organised and prepared is essential. When the unexpected happens it is easy to get flustered and make the wrong decisions. But we have strategies in place to help understand the risks and make informed decisions.
Is there a strong risk culture in motor sport?
There is a tangible culture of managing risk in motor sport. Races are very high pressure events, especially for the drivers and engineers. You can’t just turn up and race, you need to prepare and make decisions in advance where possible.
Is risk management about helping people make decisions?
Human error and behavioural risks are probably the biggest risks we face. Even the calmest of people can struggle to perform when they are overloaded with work and are having to make decisions under pressure. So we provide an environment in which they can make decisions through planning and support.
How do you approach risk management – who is responsible for it?
For sporting and technical risks we have risk management strategies, procedures and action plans that go right through the organisation, enabling the mechanics and engineers to deal with any issues that occur. With business risk we make sure that we work closely with quality partners and sponsors. For example, we jointly developed our risk management strategy with our sponsor Amlin, which has helped us put what we believe to be the right risk management procedures in place and at the highest level.
Is there a risk culture that runs throughout the team?
Risk management touches everything and everyone. The culture in motor sport is about managing risk to ensure that you have both cars and drivers on the starting grid. It’s a military approach that requires organisation and strategies to mitigate risk for a range of scenarios.
Is insurance an important part of managing risk for the team?
Yes. Formula E is an international sport; we race at high speeds through city centres in different jurisdictions, with new technology and expensive cars and equipment. This all needs insuring correctly and for the right values.
Is managing risk about safety, or is there more to consider?
Safety is of paramount importance, but it is only a small part of the risk management function because it is so engrained in everything we do. Safety management is the bedrock of what we do, but we are also focussed on getting the best race result. As well as mitigating all the risks of getting to the track with the drivers and cars ready, we also manage the risks during the race and look to optimise performance.
How do you manage the risks during the race?
A Formula E race is fluid – there are many variables that can change during the race and affect energy consumption. We have worked with Amlin to develop a tool to analyse data and help us set the best race strategy, as well as making strategic decisions as events unfold during the race to minimise risk and optimise gains.
How have you been able to use Amlin’s expertise in risk?
Formula E cars produce a huge amount of data. We have been working with Amlin to develop a bespoke strategy software tool that helps us to make the right decisions at the right time, reducing risk and optimising performance.
What does an insurer bring to the team as a sponsor?
Our partnership with Amlin is fantastic. It is not just a sponsor, it is fully engaged with our strategy. Amlin is a huge resource – its expertise in mathematics, analytics, modelling and software development has been truly impressive. Amlin has also used its marketing, design and digital media experience to build the Amlin Aguri Brand from scratch and position us as the team with the largest social media following and, we believe, the best looking car on grid.