Transcript
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StrategicRiskand
MarineShipping
PresentedtotheMITInternationalShippingClub
25April2014
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MarineShipping
Allwe
do
is
move
stuff
from
point
A
to
point
B.
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SomeBackgroundRef:Wikipedia
IntheMiddleAgestheterm risicumwasusedinhighlyspecific
contexts,aboveallseatradeanditsensuinglegalproblemsofloss
anddamage.
Itbecamewidespreadininsurancecirclesinthe1970swhen
majoroiltankerdisastersforcedamorecomprehensiveforesight.
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ManyDefinitions
Risk:Productoftheconsequenceandprobabilityofa
hazardouseventorphenomenon.
ISO31000: theeffectofuncertaintyonobjectives[positive
ornegative]
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DefineRisk
Riskistheeffectofuncertaintyonobjectivesand
theexpectationssurroundingthoseactivities;
objectivesand
expectations
can
be
both
real
and
perceived.
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Luckfavorstheprepared
EdnaMode,TheIncredibles,Disney/Pixar (2004)
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RiskProcess
RiskIdentification
RiskAssessment
RiskManagement
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RiskManagementTools Avoidance
Transfer
Mitigation Adaptation
Acceptance
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Avoidance
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Riskis
NEVER
Transferred
Riskis
LOANED
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Mitigation
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Adaptation
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Ilaidmyheartopentothebenign
indifferenceoftheuniverse.
TheStranger,AlbertCamus
Acceptance
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TypesofRisk
Occupational
Process
SystemorStrategic
Thereare
many
definitions
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SystemorStrategicRisk
WhereOrganizations,SystemsandPeople
mightormightnotworkasexpected.
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UnmanagedRisk
Risks
that
are
not
acknowledged.
Sometimesfoundasaresultofgapanalyses
Sometimesfoundwithinforward/backwardsearchesresultingfromatell.
UnmanagedRiskiswhenthereareactionsbeingtakenandtheconsequencesarenotbeingconsidered.
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Objective Multilensviewoftheenvironment.
Addsclaritybydecreasingemotionand
separatingfactfromfiction.
Advocating quantitative tools with better understanding ofthe relationships
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FiveConceptApproach
ValueAssessment
Leadership,ManagementandCommitment
WickedProblem
RiskUnderstandingandResponseCapability
KnowledgeSharingandEthics
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Concept1: ValueAssessment
McKinsey 7-S Model
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Source: HuffingtonPost/KATC
Concept1:
Value
Assessment
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Concept2:
Leadership
and
Commitment
Copeswith
Ambiguity
LeadershipLeadership
CopeswithUncertaintyManagementManagement
HappyTalkortheDeal?
CommitmentCommitment
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Concept2:
Leadership
and
Commitment
Source: Rvongher
A cavalier attitude can attract a brutal audit.
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Concept3: WickedProblem
The world is messy.But multiple, structured views help us make sense of it.
Source: Woods Hole Oceanographic Institution
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Ref: Torkel Soma, Blue-Chip or Substandard (2004)
Perspectives
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Ref:UKHSEReport113,OperationalSafetyofFPSOsShuttleTankerCollisionRiskSummary,preparedbyNorwegianUniversityofScienceandTechnology
Everythingisconnected
Ch f k d
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CharacteristicsofWicked
Problems1. Thereisnodefinitiveformulationofawickedproblem
2. Wickedproblemshavenostoppingrule
3. Solutionstowickedproblemsarenottrueorfalse,butgoodorbad
4. Thereisnoimmediateandnoultimatetestofasolutiontoawickedproblem
5. Everysolutiontoawickedproblemisa oneshotoperation
Ref: Rittel andWeber,DilemmasinaGeneralTheoryofPlanning.(1973)
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CharacteristicsofWickedProblems
6. Wickedproblemsdonothaveanenumerable(oranexhaustivelydescribable)setofpotentialsolutions,noristhereawelldescribedsetofpermissibleoperationsthatmaybeincorporatedintotheplan
7. Everywickedproblemisessentiallyunique
8. Everywickedproblemcanbeconsideredtobeasymptomofanotherproblem
9. Theexistenceofadiscrepancyrepresentingawickedproblemcanbeexplainedinnumerousways.Thechoiceofexplanationdeterminesthenatureoftheproblemsresolution
10. Theplannerhasnorighttobewrong
Ref: Rittel andWeber,DilemmasinaGeneralTheoryofPlanning.(1973)
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OceanRanger
Imagination
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Concept3: WickedProblem
The world is messy.But multiple, structured views help us make sense of it.
Source: Woods Hole Oceanographic Institution
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Concept4: RiskUnderstandingandResponseCapability
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Satisficing orfollowingminimumregulationsisoftennotenough.
RiskAssessment
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Source: Excelerate Energy,Website(14May2013)
RiskAssessment
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8000BC
3000BC
1000AD
1912
Blah, blah, blah
We have calculated the risk of loss of containment
from a collision at 1 x 10-4 events per year.
blah, blah, blah
Concept4:
Risk
Understanding
and
Response
Capability
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Consequences
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Concept4: RiskUnderstandingandResponseCapability
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Source: Titanic
(1997),
Paramount
Pictures
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Concept5: KnowledgeSharingandEthics
EthicsofHardball
Portfolio,notindividual
KnowledgeSearchandTransfer
Combats
Blind
Spots
CombatsFogofWar
DetectsDrift
Decisions need to be supported by the systems.
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ClosingNotes
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Present
Day
Marine
Risk
Discipline Laggingindicatorandreliesextensivelyontransitivetrust.
Currentlyemphasizesbreakingissuesintosmall,independent
pieceswithlittleornofuzziness.
Good: Riskdisciplineisbecomingmoreactiveanditrecognizes
thatnotallinformationisavailable.
Danger: Riskdisciplineisnotproperlyaccountingformajorvalue
setsofsociety,industryorcompany.
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MarineSystemRisk BigIncidents: ExxonValdez,Erika,Prestige,Deepwater
Horizon,
Kulluko EnvironmentalandResponsibility/Accountability
IndustryShifts: ClimateChange
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Challenges
RiskModes: Passive,CloseShadow,Strategic
Encouraging
Charterers
to
reward
better
packages.
Communicatingthatriskmanagementisvaluable:
o ReinforcesPositive: Goodthingshappenintermsofachievingobjectives.
o PreventsNegative: ABrutalAudit resultingfromanaccident.
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RiskModes
Passive
CloseShadow
Strategic
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RiskModes
Passive
Closelyfollowspeersinpack
o Benchmarkingused
to
set
standards:
Convergence
of
modelsleadstoconvergenceofflaws.
Compliancefunction. TheRandomBomb.
Littleornoriskunderstanding
Setupforfailure: TheMinorityReportproblem
Not
explicitly
linked
to
Mission
or
Values
Weonlyseeasample. Ifweknoweverythingaboutapopulation,itisprobablyhistory.RussRobins,AssociateDean,TulaneAB
FreemanSchoolofBusiness
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FlawofAverages
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RiskModeClose
Shadow
ConstantlyadjustwithValuesAssessment
Standardsareconstantlyrevisedinpassiverole
Provide
advice
when
asked
NarrowfocusonstayingalignedtotheValuesAssessment
Communicatethatbadthingshappen
Danger: ComplacencyistheenemytoSuccess
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RiskMode
Strategic
Operations
o CloseShadowmodeforoperations
o Standardsandmodelsareconstantlytestedusingexplorationandknowledge
sharing
Strategy
o ActiveparticipantinshapingValues
o ActiveleaderinValuesAssessment
o Activeconsultantinbusinessunitandcorporatestrategy
Aimtobearecognizedthoughtleader.
Successis
when
others
seek
advice.
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StrengthsofShipping Multinational
Mature
Physical
Worldmarketwithrealcurrency/trading
Whengoodsdontcrossborders,armieswill.
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Weaknesses
of
Shipping PerceivedtobeaBlackArt
LowReturns(volatileandcyclicalindustry)
HighFinancialRisk
LargeLiability
Theproblem
is
that
shipping
is
like
the
larger
world
in
which
it
operatesaninherentlydisorderlyaffair,existingmostlybeyondthereachofnationsandtheirlaws,beyondthedikes
andcoastalhorizons,andoutacrosstheopenseas.
Itis
not
exactly
acriminal
industry,
but
it
is
an
amoral
and
stubbornlyanarchicone.AnditadmitsasmuchaboutitselfWilliamLangewiesche
Risks Done Right!
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RisksDoneRight!
Source: Website, FDNY (2013)
Source: Woods Hole Oceanographic Institution
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PeterWallace Houston,Texas peter.wallace@att.net
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Discussion SharedValues: MichaelPorter,McKinsey&Company
andothersaretalkingaboutthem.
ClimateChange...
State
Owned
Companies...
ExplorationandProductionvs.Downstream...
MarineTransportation: Service?...
RelativeSizeofOrganizationscomparedtoRegulators
Whoisaccountable?When?
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