Planning for the unexpected
Global insurance and risk management expert, Marsh has warned port and terminal operators to get prepared for low probability, high impact ‘black swan’ events.
Although port and terminal operators may be aware of complex risks that threaten business and use best practice to mitigate against them, lower risk events such as natural hazards, terrorist attacks, or even major cyber-attacks, are not typically planned for.
But they can cause devastating damage to operations, destroying reputations and undermining investor confidence.
Marsh, said that although predicting these events is impossible, planning for them using horizon scanning and assumption testing is critical, in order to protect operations during a crisis.
It pointed out that a good example is the typhoon Maemi which hit South Korea in 2003 and caused significant damage to the port of Busan.
While typhoons are common on South Korea and can to an extent be prepared for, it was a combination of the typhoon’s strength, a direct hit on the port and that it hit at high tide which resulted in such a high amount of losses.
Marsh said that the best way to go some way to mitigating against the unexpected is to take a multi-stakeholder approach in order to understand the joint risk landscape, causes of risks and take shared accountability for controls.
The glue that holds all of this together is leadership, management and staff effectiveness - understanding, communication and motivation are prerequisites for high-level performance during a crisis.
So the advice is to review mission-critical activities on a regular basis and ensure that crisis plans are joined-up and exercised to ensure ability to respond.
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