How to better control and manage risks by division and a three step analysis

By Alexandros Petrakakos*

When we talk or hear about the Shipping industry everyone knows that it is the is the first world industry that correlates nations and continents. “No Shipping – No Shopping” as it goes.
According to I.M.O., “shipping is vital to the nations’ security, economy and transportation”.

It is well understood that shipping has enhanced economic development of maritime nations worldwide. It is further agreed that the industry is highly regulated with rules and regulations that lead to well-designed and subsequently well-constructed ships.

This has been achieved with the development of international regulations which are further enforced by the Port States.

As a primary concern to the stakeholders is that ships carrying the cargoes around the globe are safe within the context of every voyage (i.e. certified to be seaworthy as well as ensuring safety of life of crews working onboard at every sea passages).

The latest decision in court of the CMA-CGM LIBRA is a proof how vital the safe navigation is to the shipowners to ensure a seaworthy vessel.

Nonetheless, the industry is still faced either directly or indirectly with too many hazards resulting into minor, fatal or even total losses, as a result of inappropriate approach to risk management methodologies in commercial shipping operation.

Predominantly, accidents are the consequences of highly complex coincidences. And within the multitude of the causal factors, human errors play a dominant role. Therefore, how to demonstrate that human error has been reduced to appropriate level “As Low As Reasonably Practicable” (ALARP) is now a topical issue in the marine accident prevention.

ALARP is short for as low as reasonably practicable. Reasonably practicable involves weighing a risk against the trouble, time and money needed to control it.

Therefore, within the structure of this platform, maritime incidents at sea will be analyzed with the incidents causal factors being discussed and critically evaluated in order to reach to a level where we understand how complex this is and to propose solutions and ideas to prevent similar accidents large or small from happening again for the same reason.

In Marasco Marine Ltd “Risk Prevention” platform all participants work to achieve our goal by dividing risks into three sections, namely:

• Unacceptable; risks regarded as unacceptable are the activities causing such risks would be prohibited, or would have to reduce the risks whatever the cost.

• Tolerable; risks that are tolerated in order to secure benefits. In this particular item the risk is grossly disproportionate to the reduction in risk that they achieve.

• Broadly acceptable; risks that most people regard as insignificant. No further action to reduce such risks is required.

It is well documented from all organizations and it is evident that over 80% of maritime incidents occurred because of what is called “Crew Negligence” or otherwise called “human error”, that was a result of organizational based errors, vessel’s classification system or even a result of vessel’s regulatory framework.

Currently, within the framework of the IMO, Certification and Watchkeeping for seafarers 1995 (STCW’95), Standards of Training, International Safety Management Code (ISM Code), International Convention for the Prevention of Pollution from Ships (MARPOL 73/78), International convention for Safety of Life at Sea (SOLAS 74) and ISO 9001:2000 standards are in place as rules that assist the shipping companies and the seafarers to achieve maritime safety, risk and crisis management.

The above lead to the ISM Code which was created to assist the shipping industry with the safe operation of Ships and for Pollution Prevention in general. One reads at the ISM Code Section 1.2.2: “Safety management objectives of every shipping company should, inter alia:

o Provide for safe practices in ship operation and safe working environment;

o Establish safeguards against all identified risks; and

o Continuously improve safety-management skills of personnel ashore and aboard ships, including preparing for emergencies related to both safety and environmental protection” (IMO 2002).

We strive and typically analyze Risk Management as a three-step process, namely:

o Risk Modelling: Identifying the underlying risk factors and carry on to model the issues.

o Risk Measurement: We quantify the impact of risk factors on the company’s economical results.

o Risk Management: The above enable us to advise on how the shipping company will control risk, based on risk-informed decision making.

Total Management.

We are convinced that it is imperative for the shipping companies to implement the following objectives in order to achieve total management as a well-run company would have it:

1. Policy statement; where the company defines the management performance standard which shall become an integral part of the policy.

2. Personnel orientation; by involving the personnel, as well as the seafarers in the company’s policies.

3. Progression of personnel career through training; The personnel and the seafarers will be progressing in their career through continuous training that will lead to Certification and Watchkeeping for seafarers 1995 (STCW’95).

4. Management participation; The top and middle management will have to set the example in risk management through continuous training and adherence in the company’s policies.

5. Quality improvement program; The personnel land and sea based will have to strive to improve their commitment to quality results.

6. Quality improvement committee; by implementing this objective, it helps to develop and guide the quality improvement effort to resolve systems problems adversely affecting management and service quality.

7. Quality measurement; We have to make good efforts to timely inform on the current and potential non-conformities so that we allow for objective evaluation that will lead to corrective action.

8. Error cause identification; We should allow personnel to identify and communicate errors and problems to senior management for action.

9. Objectives; We believe that all personnel should be involved in a continuous quality program to improve the total performance of the company.

10. Corrective action; We put in place a systematic method of permanently solving the problems on a timely basis.

11. Quality cost control; We put in place the system that will assist the company to quantify the results of the error and the cost of actions necessary to prevent, appraise and remedy error that will lead to the company reducing the total cost.

*Alexandros Petrakos is a member of Marasco Marine Ltd advisor’s board and special committee ‘Risk Prevention Platform’ and senior partner in P&P Marine Consultants Inc. with more than 10 years of experience on shipbuilding/repairs and assisting clients with Dry Bulk Management Standard. More about Alexandros can be found at https://www.marasco-marine.com/board/