Drones and the need for effective risk management

UK Construction Online takes a look at the explosion of drone popularity and the need for effective risk management.

Unmanned Aerial Vehicles (UAV), more commonly known as drones, continue to see a huge upsurge in popularity and their use is widespread across a number of industries, not to mention as a pastime pursuit.

Drones can mean many things to different people. A trip to a local toy store will show anything from a tiny remote control helicopter to something a little more serious with an on-board camera that can stream images back to smart phones or tablets.

UAVs are of course synonymous with the military, with unmanned aircraft and surveillance drones very much in the public consciousness and in terms of investment, the military continue to dominate the drone industry.

UAV use stretches far beyond the military and hobbyists. Earlier this year, online retailer giant Amazon announced plans to use drones to deliver its goods in the United States and in Britain, even suggesting that separate airspace zones could be created for commercial drone flights.

The ability of drones to gather information has numerous applications, particularly amongst the numerous industry sectors.

The Environment Agency use drone technology to capture data to monitor areas of potential flood risks.

As the construction industry embraces technology and advances toward the government’s mandating of BIM Level 2, drones are used for a variety of purposes including visual mapping, topographical surveys, interactive 3D models, visualisations and creating point clouds.

Research has also been conducted by scientists at Leeds University in creating ‘self repairing cities’ that would see drones play their part by fixing potholes and fixing street lighting.

Professor Phil Purnell from the School of Civil Engineering said: “We want to make Leeds the first city in the world to have zero disruption from street works.

“We can support infrastructure which can be entirely maintained by robots and make the disruption caused by the constant digging up the road in our cities a thing of the past.”

An emerging risk report published by Lloyds of London estimates that spending on drones would double to $91Bn by 2024.

As the use of UAV continues to rapidly grow, so too does the need for regulation.

Figures obtained by the Guardian following a freedom of information request, reveal that Police forces in the UK have seen a significant rise in the number of people reporting drone flying as a nuisance.

Complaints have included drones being intrusive, breaching security, and accusations of spying. It would appear this general suspicion, deserved or otherwise, in a time of heightened security concerns will only increase as UAV use accelerates.

The general public are prohibited from flying drones within 150 metres of a crowded area and within 50 metres of a person, vehicle or structure not under their control.

Drones are classed as light aircraft and the UK Civil Aviation Authority (CAA) regulates their use.

As the need for regulations increases, so too does the need for comprehensive risk management.

The report from Lloyds suggests that manufacturers, operators and some insurers are unprepared for the potential liability and exposure this emerging technology could bring.

The report states: “As the market for drones continues to expand, manufacturers can expect to face increasingly complex and high-value risk exposures. Protection of intellectual property and the management of product liability will also likely need to be considered in the scope of insurance cover.”

The report cites initiatives such as Basic National Unmanned Aircraft Systems Certificate – Small (BNUC-S, commissioned by the UK Civil Aviation Authority) and the Remote Pilot Qualification – Small (RPQ-S) as “very positive” developments in assessing a drone operator’s competence.

According to research conducted by US insurance company Munich RE, risk managers were more concerned about invasions of privacy as they were of personal injury or damage to equipment or property.

Gerry Finley, Senior Vice President, Casualty Underwriting, Munich Reinsurance America, Inc. commented: “Businesses have set their sights on new applications for drones that could speed product delivery, monitor crops or capture claims data among dozens of others uses.

“Drones are also attracting the attention of public entities who view these ‘flying robots’ as a way to reduce some of the dangers law enforcement officers and other responders face. In some cases, drones will become a common aspect of an organization’s operations. However, there are technical, legal, regulatory and risk management issues associated with drone use that must be addressed over time.

“The drone insurance market is still evolving as the industry looks at ways to provide coverage for businesses that offer drone services to other entities, or for traditional industry segments that own and operate drones as an incidental part of their operations.”

Earlier this week, it was announced in the United States that drone users and their UAVs must register from 21 December 2015.

The Federal Aviation Administration (FAA) has said that drones bought from that date onwards must be registered before their maiden outdoor flight. Existing drone owners will be given until 19 February 2016 to register but the $5 registration fee will be waived if the UAV is registered within the first 30 days.

US transportation secretary Anthony Foxx commented: “Make no mistake: unmanned aircraft enthusiast are aviators and with that title comes a great deal of responsibility.

“Registration gives us an opportunity to work with these users to operate their unmanned aircraft safely. I’m excited to welcome these new aviators into the culture of safety and responsibility that defines American innovation.”

It is clear that manufacturers, regulators and users will need to work together to make sure that UAVs are used safely and in a responsible way and their risk management strategies managed successfully.

Operators would be well advised to make sure their insurance policy is fit for the purpose of their UAV’s use.

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