Emerging risks pose challenges for risk managers

Emerging and evolving risks are posing challenges for risk managers, says Pascal Matthey, senior marine risk engineer at XL Catlin, in Commercial Risk Online. Matthey noted that the marine market retained many traditions, and many risks were perennial. Also, marine is by its very nature a global business. Therefore global insurance programmes could help risk managers get a handle on such complex and international risks, according to Matthey.

He said there was an appetite to include marine risks in global programmes, which were growing in popularity, with more and more mid-sized companies exploring using global programmes. “For marine business, a global programme insurer can help a risk manager to get a better picture of their risks around the world, for example, for a risk manager in Japan it is important to understand that risks might be very different in, say, Mexico. Risk engineering can really help with this understanding”, Matthey said. Several risks currently facing the marine industry were not new, but were changing all the time. Political risk, terrorism and piracy were three of these, while cyber risk had become a significant concern for the marine industry.

“Vessels increasingly are reliant upon computer systems for navigation, and this opens up the possibility of a ship’s course being altered. Cyber poses a very real risk if you are transporting perishable goods – any delay to delivery caused by a cyber event could result in large losses”, said Matthey. He noted that “the sheer volume” of containers being moved through ports meant that IT systems were vital for knowing where a container was at any one time. “If that system breaks down, then thousands of containers could be left lying around with nobody quite knowing to whom they belonged and where they were destined”, he said.

Matthey felt that the ever-larger ships coming into operation were pretty safe when it came to navigation, but perhaps a greater risk came with the degree to which control was relinquished when huge numbers of containers were transported on one vessel. Transit risks, such as the wrong declaration of the contents of a container, were a concern.

However, Matthey noted that regulation was pretty tight. The International Convention for the Safety of Life at Sea (ICSLS) requires all containers to be weighed, controlled and stacked correctly.

On the new arctic routes, Matthey said that the ability to sail ships through polar waters was changing the risk profile. “It would be extremely challenging to mount a large scale rescue operation, for example. This brings with it risks of damage to goods and to the vessel itself, but also casualty risks.”