Enterprise Risk Management
in the shipping Industry
Definition fo ERM
The process of systematically and
comprehensively identifying critical risk,
quantifying their impacts, and then
developing and implementing integrated
risk management solutions- aligning
strategy, people, processes, and
technology – to maximize enterprise value.
2
Drivers Of ERM
External developments
Trail of disasters
Heightened regulatory,
board/investor, and
accounting
requirements
Investors are more
sensitive to deviation
from earnings
expectations
▼
Internal demand
Legacy of crises or
near misses
Real and perceived
rise in the number
and severity of risks
Corporate
governance
challenges
Methodological
advances
Risk analytics
Shareholder Value
measures
Portfolio analytics
Systems and
databases
▼
▼
Enterprise Risk Management
Establishment of and enterprise risk function
Explicit organization roles and responsibilities
Upgrade in risk analytics, reporting, and early warning systems
Application of risk management in business processes
Optimization of risk/return performance
3
Old Paradigm vs. New Paradigm
Old Paradigm
New Paradigm
R.M. applied only to pure
risks
R.M. applied to pure risk and
speculative business risks
Functional approach, limited to the
R.M department
Process approach transcending
functions and divisions
Operational perspective
Operational and strategic
perspective
Risk manager
Risk process or risk champion
Senior management support
Senior management support and
involvement
4
Risk Management Process
5
Identification Methods
A. Inspection
B. Analysis of internal records
- Financial-statement method
- Checklist of potential losses
- Analysis of past loss experience
- Flow-chart method
C. System approach
- System Hazard Analysis Questionnaire
- Hazard Logic Trees
- Gross...