Page 54: of Maritime Logistics Professional Magazine (Q2 2012)

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You Get What You Inspect, not What You Expect

Risk can never be eliminated completely, but proactive risk management in the maritime domain requires a commitment to ‘leaving nothing to chance’. One of the most powerful risk management tools is one that is often overlooked; the process of verifying and validating business partners. Maritime busi- ness enterprises often involve the combined interaction of a complex and diverse mix of fi rms. Verifying that the fi rms you are doing business with are not exposing your company to un- manageable risks, and validating that your business partner’s risk management strategy is aligned with yours, can go a long way toward reducing overall risk exposure.

Quality Management as a Model

The time-tested Total Quality Management (TQM) ap- proach, pioneered by Dr. W. Edwards Deming, provides a useful framework for managing risk. Just as Deming’s TQM methodology enlists the entire organization in an effort to boost quality through an integrated process management ap- proach; effective risk management requires a comprehensive and standardized corporate approach focused on continual, in- cremental improvement. By implementing the same PLAN /

DO / CHECK / ACT cycle used in quality management, mari- time executives can use focus points, metrics, process re-engi- neering, and feedback loops to mitigate risk. If it hasn’t been done already, maritime fi rms should consider designating risk management as an ‘essential business function’, and commit- ting the requisite amount of resources. Practical management systems serve as the foundation for essential business func- tions in every successful company – risk management should not be an exception. In today’s global marketplace, where weather events, criminal activity, and security breaches can cause immediate and devastating impacts throughout the sup- ply chain, aggressive risk management provides a competitive advantage.

Return on Investment

By treating risk management as an investment, maritime fi rms can create value, enhance their competitive posture, and ensure long-term viability. Investors, insurers and regulators all encourage this approach as well, which leads to the ulti- mate competitive advantage: direct market rewards. It’s hard to argue that a more secure and resilient business enterprise is not a more valuable one. The cumulative, market-driven effect of businesses investing in risk management initiatives ultimately provides residual benefi ts throughout the entire global economy. Maritime fi rms with world-class risk man- agement programs have a true competitive advantage in the market place.

The Author

Luke Ritter leads the maritime practice (Flag Bridge) at Ridge

Global. He is the co-author of Securing Global Transportation

Networks (McGraw Hill) and can be reached at: maritime@ ridgeglobal.com.

RISK MANAGEMENT 54 | Maritime Professional | 2Q 2012

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