1. Shaanxi Normal University International Business School Baolai Wei A Cost Analysis for Navigation Risk

2.  I. Research Background 1.Transportation industry is the link that connects production, distribution, exchange and consumption in the national economy, the bridge of international communication, and also an important part of national defense construction.

3.  I. Research Background 2.As a transportation industry, navigation has such advantages as large capacity, low cost, low energy consumption and making use of natural waters. 3.Developing navigation can improve national industrial structure and technical structure. 4.Navigation has such disadvantages as high debt management, high cost expenditure and changeable market.

4.  II. Purpose and Significance 1. To prevent and control navigation risk and realize system security 2.To strengthen the navigation risk cost analysis and realize the effective management of navigation risk cost

5.  III. Navigation Risk Cost The relevant expenses and fees to keep safety operation, prevent or reduce the occurrence of dangers in the navigation process, or the lost monetary measurement in case of failing to reach expected risk management objectives, is the cost expenditure to reduce the uncertainty of navigation, and it can be divided into navigation risk control cost and navigation risk loss cost.

6.  III. Navigation Risk Cost One important goal of navigation risk management is to evaluate the overall acceptable risk level of shipping companies during stable operation.

7.  T he traditional navigation risk management methods: 1. Conservation: the risk consequences are smaller or less important, and have mild effect on shipping companies. 2. Circumvention: the risk consequences and severity are unbearable for shipping companies and affect the operation of shipping companies. 3. Minimization: most of the risk consequences are within the acceptable range of shipping companies and preventive measures are taken to reduce the risk possibility according to the risk tolerance of shipping companies.

8.  IV. Characteristics and Composition of Navigation Risk Cost Navigation risk cost can be divided into: 1.Execution cost of safety standards of navigation (input cost of safety facilities, personnel management and training costs); 2.Preventive maintenance cost (technical risk cost); 3.Voyage risk cost (risk loss cost); 4. Environmental risk cost. Navigation risk loss cost can be divided into: 1. Internal loss cost; 1. Internal loss cost; 2. External loss cost. 2. External loss cost.

9.  V. Navigation Risk Cost Control Navigation risk cost management: 1. Target cost management; 2. Determination of target cost: a. raise of problems; a. raise of problems; b. determination of main influence factors; b. determination of main influence factors; 3. Breakdown and control of target cost.

10.  Benefit Indexes of Navigation Risk Cost Management Q(Benefit rate of navigation risk management) = NB (net risk benefit) /C (risk control cost) NB stands for the net benefit of navigation risk management in report period, i.e. the cost reduction of risk loss; Ct stands for the risk control cost during the operation of shipping companies in report period; K stands for the investment expenditure of navigation risk cost in base year.

11.  Risk Benefit Produced by Reducing Loss Cost The occurrence frequency of loss cost is random and the occurrence probability is: The expected value of loss cost is:

12.  Risk Benefit Produced by Reducing Loss Cost E1(CK) stands for the expected value of loss cost of navigation risk management in base period; E0(CK) stands for the expected value of loss cost of navigation risk management in report period.

13.  VI. Matters Needing Attention in Navigation Cost Analysis Management 1.Establish scientific and reasonable crew management and training system; 2.Establish scientific ship repair and maintenance system; 3.Improve the organizational system of navigation risk cost management.

14. Thank you ！ A Cost Analysis for Navigation Risk