Risk Assessment

Risk AssessmentImproving UWR decisions

Marius Schønberg, Loss Prevention & Risk Assessment

ContentRisk Assessment

• Loss Prevention & Risk Assessment (LPRA) main goals

• Risk Assessment (RA) activities and deliveries (support to UWR)o Portfolio monitoringo Vessel Observationso Fleet Assessment (FA)o Vessel Surveyso Management auditso Knowledge sharing

• Gard’s Risk Assessment (RA) team

Reputational and Operational RiskWhy Risk Assessment (LPRA) is important

Erik Stein besiktiget Scandinavian Star på vegne av forsikringsselskapet Skuld rett før skipet brant. Han

mente skipet ikke burde få forsikring, men ledelsen gikk mot hans anbefaling. Som

havarisjef i Skuld dro han til Cuxhaven for å inspisere skipet kort tid før brannen som kostet 159 mennesker

livet. Han fant flere feil og mangler på brannanlegget om bord. I tillegg var besetningen

så liten at det ikke var mulig å gjennomføre en brannøvelse.

LPRA main goalsLoss Prevention & Risk Assessment

• The Loss Prevention (LP) sectiono The LP section shall, in cooperation with UWRs and claims

staff, develop and deliver LP products to our clients in order to reduce and prevent losses among vessels in our portfolio, in addition to service and added value for member & clients

• The Risk Assessment (RA) sectiono The RA section shall monitor, identify and assess potential

risks, and report findings as support to underwriting. The RA-section assess and evaluate the quality of vessels, fleets and management through vessel observations, surveys, fleet assessments and management audits.

Risk ManagementWhat is Risk?

R = L x C

Risk = Likelihood x Consequence

Probability x Severity

Probability x Impact

R = L x C“The possibility of a loss”

Risk ManagementWhat is the risk?

“The possibility of a loss”

What is the Risk indicators?Identify your risk

OBO Tanker

Cable layerAHTS

Task; List the different types of risk indicators

Risk ManagementPrioritize your risk “Risk exposure and HML scale

PROBABILITY/FREQUENCY

SEVERITY

High Medium

Low

Low Medium High

1 2 3

2 4 6

3 6 9

Risk ManagementRisk Management Planning

• Avoidance Eliminate, withdraw from or not become involved

• ReductionOptimize – mitigate (Probability and/or Severity)

• TransferTransfer to other parties – insure

• RetentionAccept and budget (self-insurance) all or partRisk management planning often combines different

options

“Operational Risk - The ship owners options”

1 2 3

2 4 6

3 6 9

Risk ManagementRisk Management Planning

“Risk exposure”

PROBABILITY/FREQUENCY

SEVERITY

High Medium

Low

Low Medium High

UNACCEPTABLETRANSFER

OPPORTUNITY FIELDRETAIN, MANAGE & CONTROLACCEPTABLE

Risk ManagementRisk mitigation / Resolution

“Risk exposure”

PROBABILITY/FREQUENCY

SEVERITY

High Medium

Low

Low Medium High

TRANSFER

OPPORTUNITY FIELDRETAIN, MANAGE & CONTROLACCEPTABLE

UNACCEPTABLE

Risk AssessmentLPRA Toolbox

Fleet Assessment

IRACs

Claims trends & loss

recordKnowledge

Sharing

Management Audits

Portfolio monitoring

External sources

Vessel observations Vessel condition

surveys

Vessel Portfolio monitor report

Deliveries and support to underwritersRisk Assessment

• Portfolio monitoring• Vessel observations• Fleet Assessments • Vessel surveys• Management audits• Knowledge sharingOther external

sources

G A R D

C O M P E T E N C E

Gard Claims database

Added value to UWR through: Gard

Observationdatabase

Deliveries and support to underwriters(1) Portfolio Monitoring

Main activities Sources

DetentionsClass suspensions & withdrawals

EU/Paris MOU blacklists

Green award & Qualship 21

ILO abandonment of seafarers

Monitoring of individual risk performance

o Records and claims performanceo Ship surveys o Management audits

“Risk Assessment”

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(I) Portfolio Monitoring

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

The main purpose of this report is to provide UWRs in Gard with a summary of relevant data and statistics

obtained from monitoring the Gard portfolio, in order to improve their insurance risk assessment and UWR

decisions.

Deliveries and support to underwriters(2) Vessel Observations

• A computerized tool to store ship and company specific information

• Developed in close cooperation between UWR, Claims and Risk Management

• Integrated in our data ware house - allows export of data to any other computerized Gard tool.

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(2) Vessel Observations

Observation Type DescriptionBANNEDSHIP Banned ShipsDETENTION Vessel DetainedGREEN AWARD Green AwardQUALSHIP21 Qualship21MACHINERY Machinery Obs Main EngineIGSURVEY International Group SurveyYARD Build YardPOOR CONDITION Vessels which have indication of poor tec. conSINGLE HULL TANKER Single hull tankersBLACK LISTED FLAGS Black Listed FlagsCLASS Class - Medium to Very Low Performance Level

POD PROBLEMSThe vessel has had several problems with the POD.

VESSEL ARRESTED Vessel ArrestedGARD SURVEYS Gard SurveysGARD SURVEY - NOT RECOM. Gard Survey - Cover not recommended

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(3) Fleet Assessments

Combines information from a number (!) of internal and external sources. The UWR provides the IMO numbers in question. In return:

- Previous involvement? - Detentions? - Previously paid claims? - IG survey database? - Banned from EU? - Technical ship data - Blacklisted flag? - Green Award/Qual ship 21?

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(3) Fleet Assessments

No of engines 38

Engine design MAN

Designation 9L48/60

Stroke 4

RPM 500

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(3) Fleet Assessments

Date from Date to Obs type Obs group Obs description Responsible Commendation2009/06/20 BANNEDSHIP Banning State: Spain BIRMAG Do not quote

2008/12/09SINGEL HULL TANKER Built after 1983

Potentially phased out in 2010, ref IRAC 2/2008 ROSSTU For Information

2008/11/24 DETENTION Paris MOU BIRMAG For Information

2008/08/13BLACK LISTED FLAGS Very High Risk Flag Comoros - Very High Risk BIRMAG Do Not Quote

2008/04/17 01/12/2008 MACHINERY MAN - 9L48/60

Service letter CUS 146. 03/97. Further development of inlet and exhaust valves. Ref DM doc 1131577. SAEPER Contact LPRA

2008/02/02 IGSURVEY Club: Steamship ROSSTU For Information2007/10/17 DETENTION Paris MOU BIRMAG For Information2006/10/09 DETENTION Paris MOU BIRMAG For Information

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(4) Vessel surveys

• Entry surveys

• Condition surveys

• H&M Entry surveys

• Combined surveys (H&M and P&I)

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(4) Vessel surveys

• For P&I, we have to comply with survey rules set out by the International Group (IG):

All tank vessels older than 12 yearsAll non-tank vessels older than 12 years and above 1000 GTCondition survey of all vessels having carried Heavy Fuel Oil (HFO) as cargo and older than 10 years

• A vessel scoring below a certain standard will be declared a ”Designated vessel” (sub-standard) and cover declined. Any other P&I club covering this vessel will carry a double retention.

• IG maintain a list of all vessels surveyed by the members of IG.

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(5) Management Audits

• Normally requested by the UWR in connection with renewals or new acquisitions, or by claims after a serious accident

• Focus on procedures, crewing routines, training, ISM and maintenance

• 1 or 2-days inspection, initial findings reported to owner/manager, written summary follows after 6 – 10 days

• Has proved to improve relations and loyalty ”Gard knows and understands our way of working …”

AUDIT

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

Deliveries and support to underwriters(6) Knowledge Sharing – Internal Risk Assessment Circulars (IRACs)

• Risk information which may have a longstanding impact on our risk selection is issued as an IRAC. E.g.:

- Trading in the Arctic and Antarctic regions

- Phase out of single hull tankers- Reefer vessels- Engine design errors

Portfolio monitoring

Vessel observations

Fleet Assessments

Vessel Surveys

Management Audits

Knowledge Sharing

The LPRA Risk Assessment teamThe RA-Section

Terje R. Paulsen

Vice President

Bjarne Augestad

Senior Marine Surveyor

Valentin Klivnoy

Marine Surveyor

Per Arne Sæther

Senior Marine Surveyor

Per Haveland

Marine Surveyor

Magnar Birkeland

Senior Risk Assessment Executive

Lise Neset

Risk Assessment Executive

The LPRA Risk Assessment teamGeographical UWR teams

• 4 surveyors dedicated to geographical UWR teams• Participates in monthly/weekly UWR team meetings • Responsible for FA, Monitoring and follow-up within the team. • Improves LPRA UWR area knowledge• Provides technical ship knowledge to underwriters when

necessary

Bjarne AugestadPer Arne Sæther

Per Haveland

• Northern Europe (Bjørn)• Offshore & Charterers (Tore / Terri)• E&P (Gunnar)• Marine Builders Risk (Knut

Morten)

• Nordic (Knut)

• Southern Europe (Bart)

• America, M-East & L (Ian)

Valentin Klivnoy

• Asia (Sid)

o Internal Risk Assessment Circulars (IRACs), investigations and enquires.o Trend analysis & performance analysis, Claims trends, machinery, trade, segmentso Ad hoc reporting, changes in rules, technical updates, input Gard's portfolio level

Risk Assessment (RA)Goals and ambitions

o Ports State Record, Class status, EU Banned ships, Flag status, observations, Claims freq, KPIs

o Based on Portfolio monitoring, Surveys, LPRA technical findings and claims reporting

o All available information on vessel level (GOLF) – input to pricing tool

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2

3

PORTIFOLIOMONITORING

Goals and ambitionRisk Assessmentdeliveries (6)

VESSELOBSERVATIONS

o Available client data, vessel information, premium data, claims history, o Technical advices and assessments to UWR prior to entry or renewalo Qualified Assessment (trade areas, ports, charter, cargo)

FLEETASSESSMENT

• Conduct 200 (+) surveys annually; 50 internal and 150 external. • The right balance between entry and condition surveysVESSEL SURVEY

o QA-systems, ISM system, manning solution, maintenance (PMS), safety culture

5

MANAGEMENTAUDITS

KNOWLEDGESHARING6

4

Questions?Thank you