Every organisation faces risk and must balance its attitude towards risk and reward. The key question is: ‘What is the acceptable risk?’ High-risk ventures may collapse, yet they can also deliver the biggest reward. Conversely, fewer, safer and more conservative risks within an organisation may mean modest returns but long-term survival.
Risk Management in Shipping report examines the major risk sectors and recommends potential methods for best practice.
Key issues of Risk Management in Shipping
Best practice – focus on a risk management system in a shipping company Risk – the exposure and the uncertainty
Understanding risk appetite and how it shapes management strategy
Quantitative and qualitative elements in risk management evaluation and strategy
Ship ownership and strategic risks
Risks to the vessel, people and systems
Corporate risks
On multi-levels
Multi-layered
Take account of the ‘big picture’
Take account of day-to-day operations
Although there is no ‘official list’ of the risks affecting the shipping industry, the most likely risk elements include:
Strategic
Market
Credit
Financial
Operational
Legal
Organisational
Sovereign
Evaluating exposure to risk
The report provides key insights into the chances and consequences of risk occurring and identifies the essential processes of risk management:
Risk identification – Identifying the threats to the organisation and its day-to-day operations.
Risk measurement and evaluation – Categorising risks within the company’s overall hierarchy of threats, ranging from absolute to relative.
Risk management actions – Strategic and operational changes to contain risk within acceptable bounds.
Risk management
It’s Risk Management in Shipping report examines the concepts behind risk management and strategies that shipping companies can evaluate. It assesses in turn each of the major risk sectors faced in shipping and concludes with thoughts on potential best practice.
One logical starting point in any aspect of risk management is to model and evaluate the ‘do nothing strategy’. There will be instances when this is an acceptable approach – and might even be the best approach. The ‘doing something’ strategy effectively creates a process of strategic and operational changes, plus risk transfer, that lead to risk being brought within the acceptable risk parameters.
It explains the ways in which proactive risk management can lead to strategic changes that bring profound additional benefits for businesses.
Effective risk management
The report also examines how effective risk management solutions should encompass:
Practical changes in the operation of the vessel related to the particular threats identified.
Evaluation of the financial impact of changes and consideration of appropriate risk transfer through insurance.
‘What if ……..?’ scenarios should be enacted and contingency plans drawn-up by risk managers.
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