Managing Risk in the Cellar: Combining Technology and Expertise to Protect Operations (Expert Edition)

Winery owners who want to be sure their business is protected long into the future
it would be wise to invest in risk management.

By Larry Chasin

Wineries regularly deal with critical risks that threaten their operations. From wildfires to equipment failure to changing inventory and property values ​​caused by inflation, supply chain struggles and more, the risk profile of a winery today is filled with potential challenges. Compounding these external factors, wineries are incredibly complex operations, often combining farming, manufacturing, hospitality and retail operations in one location. A loss, damage or disruption in any of these aspects of a business can be costly and even catastrophic.

As we move into 2023, now is a good time for business owners to reflect on the past year, consider the risk exposures their business faces and implement new measures to address them. Fortunately, these days, winery owners are not alone when it comes to risk mitigation. Not only can their insurer help them understand how to identify and mitigate risk, winery owners can turn to technology to mitigate risk and help ensure safe and continuous operations.

Technology to view

Whether you’re familiar with it or not, smart technology is easy to access and can significantly help limit or prevent losses associated with several key risk exposures. These smart tools include:

  • Remote control sprinklers: Wildfires continue to plague the industry, and while sprinklers can’t guarantee that a property will remain untouched by fire, they can be a big help. With smart technology, staff can activate sprinklers remotely to prevent damage and potentially limit the spread of fires. It can also be a valuable tool during growing seasons, as staff can remotely adjust sprinklers to ensure optimal water management on the property and confirm that grapes and other vegetation are receiving adequate hydration at the appropriate time.
  • Smart equipment: Staff can now adjust temperature controls and shut-off valves on critical winery equipment from afar. That way, even when management is home for the day or out of the office, they can regularly check the property’s equipment and make sure everything is in order.
  • Sensors: Over the past few years, several wineries have implemented sensors for a wide range of purposes. These include heat sensors to monitor the temperature throughout the property, light sensors and water sensors to track levels and their effect on vegetation and much more. With these sensors, wineries can closely monitor their property and ensure that monitored levels do not exceed comfortable thresholds.

Through this new technology, winery owners and operators can do a better job of protecting their properties, limiting fire risk, and preventing equipment damage and downtime. For winery owners looking to improve their risk management efforts, investing in smart technology can be a smart move. Working with an insurer that specializes in protecting wineries can take your risk mitigation plan one step further.

Finding the right partner

A specialist insurer with years of experience in the industry will have the knowledge and tools to help winery owners best protect their business. A good insurance partner will also have access to proprietary smart technology to ensure the winery is covered no matter what happens. This technology may include:

  • The drones: Drone cameras can be used to create models of structures and buildings on the property. These patterns can then be analyzed by the underwriter to identify any potential exposures on site. For larger wineries, drones can help ensure all structures have the necessary coverage and bring the scope and scale of the property into manageable focus. In this way, pumps, sheds, barns and other smaller parts of the property are not neglected.

Drones can also offer an extensive view of the vegetation on the property, which can help insurance professionals provide specific recommendations regarding defensible space for wildfire protection. Some insurance professionals also use telemetry drones to take accurate measurements of structures and assets throughout the property. These measurements help estimate and ensure accuracy of building square footage, exterior tank sizes and volumes. Through drones and captured telemetry, insurers can even use tilt images and data to construct 3D models of structures to further assess finishes and construction to maximize the accuracy of estimated replacement costs.

  • 360 degree cameras: The 360-degree cameras allow insurance professionals to build in-house 3D modeling, stitch images, measure square footage and provide comprehensive loss prevention analysis for winery owners.
    Disaster modeling: Catastrophe modeling (CAT) has been around since the 1980s, but has grown significantly in the past few years. In particular, risk assessment through CAT modeling has become much more accurate. CAT modeling can now run simulations at any specific location to give a probabilistic representation of the potential impact of CAT. Data derived from modeling can be used to understand risk exposures and confirm that a winery owner or operator has sufficient insurance coverage.

Prepare for the worst

All of these smart tools offer features that help insurers confirm that their winery customers are adequately covered should the worst happen. All too often, winery owners file an insurance claim only to find they don’t have coverage for something because it wasn’t properly listed on their policy. Winery owners should work with their insurers to ensure accurate square footage is reported and new equipment and new inventory are always included.

Incomplete or inaccurate reporting, combined with the rising material and inventory costs we are currently experiencing, means that many wineries could be set up for trouble. Not having coverage that includes adequate repair and restoration limits in today’s dollars can prove incredibly expensive for winery owners.

Winery owners who want to be sure their business is protected long into the future would be wise to invest in risk management. By combining the knowledge and expertise of a specialist underwriter with the latest technological innovations in risk management available, winery owners can be confident that their business is prepared to handle any risk exposures that lie ahead.


Larry Chasin

Larry Chasin is president and CEO of Programs PAK, which provides insurance programs for wineries, vineyards, breweries, wine and spirits retailers, ciders, meads, distilleries, importers and distributors of spirits and wine. He can be reached at [email protected].

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