Anuj Sahai Lloyd’s Register Asia, Singapore Risk Assessment in Shipping Companies Intertanko Vetting Seminar Singapore 29th November 2005 Welcome – Pleasure to be here Introduction – Me, Seagoing / Superintendent / Insurance and now with LR Recent background LR Singapore Live Close Risk Management in Shipping Companies Wish to talk/discuss about the Industry’s performance in this area as a whole thus not only the progressive Companies 20 minutes or so “setting scene” so to speak and then some discussion on if you agree with my comments! Anuj Sahai Lloyd’s Register Asia, Singapore

Risk Assessment Do the shipping companies do it well? Risk Management Are shipboard risks well managed?

Source: Fearnleys, ITOPF Leading indicators Let us have a look at the oil movement trade, almost twice to what it was 20 years ago and the large spills – they are down to third. Source: Fearnleys, ITOPF

Leading indicators 99.99999% of oil is safely delivered. In the last few years, tremendous amount of resources in getting ‘operational risk’ management off the ground. Because of tremendous amount of work done and the intellectual capital that already resides in the industry, Risk management, although topic, is no longer a buzz word. All, especially the tanker operators ashore are well familiar with the methodology and have made concerted efforts to get it off the ground. Just have a look at the number of seminars, training initiatives by class and other bodies and you will know what I am talking about. 99.99999% of oil is safely delivered. Source: Intertanko

Source: LMIS, Informa, press, INTERTANKO Leading indicators In the last few years, tremendous amount of resources in getting ‘operational risk’ management off the ground. Because of tremendous amount of work done and the intellectual capital that already resides in the industry, Risk management, although topic, is no longer a buzz word. All, especially the tanker operators ashore are well familiar with the methodology and have made concerted efforts to get it off the ground. Just have a look at the number of seminars, training initiatives by class and other bodies and you will know what I am talking about. Source: LMIS, Informa, press, INTERTANKO

Perception The risks are well managed. Further improvements - only incremental. Risk Assessments – why?

Risk Assessment requirements Deficiencies Critical systems and equipment Health risk assessments Management of Change Near misses Industry would rather learn from the mistakes and accidents that have already happened then the ones that are waiting to happen or may happen in future. Great fire-fighters, maybe not so good at looking ahead long term.

Reality IMO / Flag regulated Reactive not proactive Why fix it, if it ain’t broken? Compliance driven Industry would rather learn from the mistakes and accidents that have already happened then the ones that are waiting to happen or may happen in future. Great fire-fighters, maybe not so good at looking ahead long term.

Risk Assessments Let someone else do it! Still thinking about it! Shipping companies don’t see any tangible benefits of risk assessments! Often Risk Assessment in a Company is done due to problems found – Thus re-active – Risk Assessment is supposed to find out where a Company MAY HAVE problems so that they can be solved beforehand. There is a link obviously between investigating incidents and risk assessment but it should be for lessons learnt not the only time to do the assessments Many Companies do good Risk Assessments of Specific Shipboard Operations quite well. It’s the linking of everything together that is the area that is lacking Let someone else do it!

Why Risk Assessments? ISM Code – Implicit OCIMF – TMSA Manage shipboard risks better Continuous Improvements What is suggested, probably some Companies doing it but in general from the evidence seen at DOC audits its not done Industry wide

Suggested Approach Red – Look at the whole Company occasionally (yearly?) A high level view of what is important and what could affect the Company’s existence. Brain-storming session of top management? The review may include all of the areas that may an impact on the Company, interest rates, freight rates, trade, crew availability, impact of the changes made to company procedures, past and future software upgrade, future legislation and environmental issues, customer needs – need to have the answers that customer has not asked… not yet anyway. Also take a moment and revisit past incidents, analyze trends and review of controls have been adequate to mitigate risks and hazards. Shipboard level – The people at the sharp end are the ones to identify operational hazards. There is no replacement for good awareness levels and accountability to the seafarers who carry out the job.

Are your assessments being effective? Business or safety performance improvements? Can the benefits be measured? How do you know, if you are carrying out these assessments, if its actually working? Often no direct savings or benefits seen How do you justify the cost of carrying out the Risk Assessments?

Link Risk Assessment to Performance (KPI’s) LTIF LTA’s Non-budgeted repair costs PSC results Insurance claims To crews! Retention Satisfaction Accidents – Procedures, Competence, Training, Awareness Off-hire – Reliability, New Buildings? – same equipment? Maintenance, Crew Competence, Charterers?, Right ship Maintenance Costs – Linked to above, Inspection Routines PSC – If results bad why, is this the ship you want? Inspection Routines Finance Insurance Claims Crew

Business Management and Risk Management Shipboard Risk management is about minimizing the chance of failure – pure risk Effective risk management requires structured risk assessment as an input Successful business manage their risks. However, effective risk management does’t just happen; something has to feed it. If the risks are not identified and assessed, how can they be managed?

Hazards Identified using Different Approaches Actual Total Hazards ID from Prescriptive ID from Structured Risk ID from Unstructured Risk 100 %

A Culture within a Culture Safety Management Culture Risk Based Culture

Summarize Further Training / refresher training Continuous Improvement Commitment Competitive Advantage

Building better business Working together to improve business performance