Marine Losses Continue Downward Trend

The marine industry continued to see a steady decline in the number of large ships losses globally since 2002, with 94 ships lost in 2013, down 20% from 117 reported in 2012, according to a study by Allianz.

The “Safety and Shipping Review 2014” by Allianz Global Corporate & Specialty found that of ships lost, the largest number, 32, were cargo vessels; 14 were fishing vessels; and 12 were bulk shipments. Only six passenger ships were lost, the survey found. The most common cause of losses in 2013, and over  the last 12 years, was foundering (sinking or submerging). The demise of 69 ships accounted for nearly three-quarters of all losses—with bad weather a significant driver.

Worldwide there were 1,673 losses from Jan. 1, 2002-Dec. 31, 2013, with an average of 139 per year. The top geographic area for losses has been South China, Indo China, Indonesia and Philippines. The area including British Isles, North Sea, English Channel and Bay of Biscay is still ranked fourth, despite improvement. With 45 losses overall, the U.S. eastern seaboard improved in 2013, dropping out of the top 10 regions.

According to the study, January is the worst month for all casualties in the Northern Hemisphere. There were 23% more losses in January compared with the quietest month, June. In the Southern Hemisphere July sees 41% more losses than April.

The majority of losses are caused by machinery damage, the reason for most losses in marine insurance. Statistics from the International Union of Marine Insurance (IUMI) report that 40% of hull claims are machinery damage and account for 20% of costs.

The review found that while piracy is still a threat, it has also subsided. Piracy at sea reached its lowest levels in six years, with 264 attacks recorded worldwide in 2013, a 40% drop since Somali piracy peaked in 2011. Fifteen incidents were reported off Somalia in 2013, including Gulf of Aden and Red Sea incidents, down from 75 in 2012, and 237 in 2011 (including attacks attributed to Somali pirates in Gulf of Aden, Red Sea and Oman).

According to the study: “The very real threat of piracy for ships operating in the Gulf of Aden reached the general public last year as the Hollywood Oscar-nominated blockbuster Captain Phillips was released. Tom Hanks played the lead as the master of the pirated Mærsk Alabama, broadcasting the piracy problem to a much wider audience and raising awareness of its consequences. The steps that the international maritime community has taken to reduce the threat of piracy in the Gulf of Aden have been extremely successful with the number of ships seized and hostages taken in 2013 significantly down on 2012.”

Lower losses overall were attributed to a number of factors including increased regulation, which has helped the maritime industry improve its safety record. Because the quality of operations varies in different regions, however, there is a big need for universal regulations on ship safety to reduce the risk of casualties and loss of life, the survey concluded.

 

GRC and Risk Management

Risk management is the most important part of an organization’s governance, risk and compliance program (GRC), according to a survey. When asked to forecast priorities, 33% of respondents stated that enterprise risk management is most important and 27% said ERM would continue to be important to their company. Out of 12 barriers to their GRC goals, organizations identified a lack of resources (52%) and lack of collaboration and cooperation (44%) as their top obstacles.

 

GRC Software | ERM Software
Courtesy of: CAREWeb

Executives Explore Strategic Risk

Quickly made business decisions and innovations in technology—such as big data and social media—can throw a curve to a company’s strategic risk management, according to a survey by Deloitte. As a result, risk managers need to be prepared to act quickly to avoid disruptions that can follow.

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The study, Exploring Strategic Risk: 300 Executives around the World Say Their View of Strategic Risk is Changing, found that 81% of companies surveyed manage strategic risk explicitly, focusing on major risks that could impact the long-term performance of their organization.

Strategic risk management is also more of a board level priority, with 67% saying the CEO and board have oversight in managing strategic risk. They also say reputation risk is now their biggest risk concern.

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Much of this concern is due to the instantaneous aspects of social media globally, which can impact a company’s perception in the marketplace.

While reputation was already the top risk identified by financial services three years ago, and still is today, the energy sector didn’t see reputation as a top-five risk. Today, however, they see it as their number-one risk.

Respondents said they expect human capital and innovation to be the top strategic assets for companies to invest in three years from now, according to the study.

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Illustrations: Deloitte

Train Disaster Calls for Safety Action

Photo: eddtoro/Shutterstock.com

At 7:20 a.m., Dec. 1, four people died and more than 68 were injured, 11 critically, when a speeding passenger train headed for Grand Central Terminal derailed on a steep curve.

Brake failure was cited as a possible reason for the crash, but inspections determined that the brakes were in good condition. The train’s operator, who recently had been switched to an early shift, later said he may have dozed off, failing to apply the brakes in time to avoid the crash.

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The derailment is of special interest to me. The Hudson line is the one I take to work every day and is the same line that suspended service in July when 10 CSX garbage cars derailed near the same location, just north of the Spuyten Duyvil train station.

This week the Federal Railroad Administration cited the MTA’s safety record as “unacceptable.” The agency noted a series of other recent major accidents on the commuter railway: a two-train derailment May 17 in Bridgeport, Conn., where more than 70 people were injured, the death of a track worker in West Haven, Conn., who was struck by a commuter train, and the CSX train derailment, according to DNAinfo New York.

The Associated Press said that injuries from train accidents on Metro-North are higher this year than any of the past 10 years, with 123 people injured in train accidents through August. A 2012 report by the Government Accountability Office found human error to be the cause of almost one-third of train accidents from 2000 to 2009.

The question being asked is why a safety measure—an automated system that would stop a train that is out of control—was not in place, even though “positive train control” has been called for by the national safety board. In response to several fatal accidents and to combat human error, The Rail Safety Improvement Act of 2008 mandates that positive train control for passenger and freight trains be operational by Jan. 1, 2015. Because of the costs to install the technology, estimated between $6 billion and $22 billion, however, Congress is considering an extension of the deadline until late 2018.

The GAO report described positive train control as a system designed to prevent accidents caused by human factors, including train-to-train collisions and derailments that result from trains exceeding safe speeds. It is also designed to prevent incursions into work zones and movement of trains through switches left in the wrong position.

While its safety record leaves much to be desired, the MTA was fast to resurrect its contingency plans. On Monday, thousands of commuters were transported by bus from the Yonkers train station to a Manhattan-bound subway. I made the trip, which was seamless but understandably slow-going. It took me two-and-a-half hours to get to work.

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A standout were the first responders. They were fast to arrive on the scene, rescuing people from damaged cars and getting them to area hospitals. Responders and spokespeople were articulate, and did not speculate as to the cause of the crash. They were impressive.

As of yesterday service on the Hudson Line is fully restored.

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This is an amazing feat considering that the train cars had to be removed by cranes from a tight section of track flanked by the Hudson River and a steep rock embankment, all during an intense investigation. Sections of damaged track also had to be rebuilt.

Yesterday’s train ride was thankfully uneventful and today’s even more so, but there was a sad reminder of the disaster on both days, when the train came to a crawl as it approached the deadly curve at Spuyten Duyvil. Another reminder was several pieces of heavy equipment used for cleanup, still sitting near the tracks.