THE overall level of satisfaction that sound risk management has contributed to the success of organisations within the shipping industry has declined compared to last year, according to the second annual "Moore Stephens Shipping Risk Survey".
Respondents to the survey rated the extent to which enterprise and business risk management contributed to the success of their organisation at an average 6.6 out of 10 compared to 6.9 last year.
Twenty-three per cent of respondents returned a rating of eight, compared to 26 per cent last time, while 70 per cent put the figure at more than five out of 10, as opposed to 74 per cent in 2015.
Overall, respondents rated the extent to which enterprise and business risk was being managed effectively by their organisations at seven out of 10 (unchanged from last time), reported London's Tanker Operator.
Demand trends were deemed by the greatest number of respondents to pose the highest level of risk to their organisation, closely followed by competition, with the cost and availability of finance in third place.
Respondents to the survey felt that the level of risk posed by most of the factors which impacted their business would remain largely unchanged over the next 12 months, with the exception of tonnage supply and competition, which were perceived to have the potential for increased risk.
Overall, 69 per cent of respondents felt that the senior managers in their organisations had a high degree of involvement in enterprise and business risk management, as opposed to 72 per cent in the previous survey.
Said Moore Stephens partner Michael Simms: "Few other industries could claim to be exposed as much to risks arising from economic uncertainty, miss diagnosed analyses, renegotiation of existing contracts, lack of financing, uncertainty over asset valuations, defaults on loan repayments, political sanctions, monopolistic policies, regulatory changes, falling crude oil prices, customer insolvency, fears over the Chinese economy, uncertainty in Europe, and plain old supply and demand.
"There is also a growing threat from extraneous factors such as cyber security and the increasing level of IT-related risk. The industry's risk profile is changing, and with that the industry itself must change its approach to identifying risk. For some, outsourcing is a solution. However, managing the risk of doing this must not be overlooked. If the risk is not recognised, it cannot be controlled," said Mr Simms.
"The key to identifying and mitigating any type of risk lies in the application of sound, firm-wide governance control systems. Simply paying lip-service to corporate governance will not do. The tone needs to be set by senior management, leading from the front," he said.
Source : HKSG.