Growing Risks in Shipping Industry Include Cyber, Piracy and Super Storms

A new insurance industry report highlights the growing security and safety risks the shipping industry faces – from cyber attacks to piracy and super storms – and warns that shippers should be better prepared to handle these exposures. This report comes on the heels that 2015 was the safest year for the maritime industry in 10 years.

Cyber Threats

As ship owners and ports undertake the digitalization of their operations for greater efficiencies and growth, the risk of cyber threats is on the rise. Computerized systems are used for everything from navigation to container inspections, tracking and managing transit, and handling and release of cargo as well as terminal operations. While these smart ships and ports garner many benefits, they also open up the maritime industry to cyber attacks. Moreover, because global maritime logistics is highly integrated, it’s possible for a company in the supply chain to become a victim without having been the target.

In fact, concern over cyber security in the shipping industry is a top-of-mind issue on the agenda of the International Maritime Organization’s (IMO) Facilitation and Maritime Safety Committees. According to the IMO, both committees are working collaboratively in the development of voluntary guidelines on adequate anti-cyber security practices, which may be used to protect and enhance the resilience of automated systems supporting the operations of ports, vessels, marine facilities and other elements of the maritime transportation system. Indeed, the 96^th session of the IMO’s Maritime Safety Committee taking place in London next month will be reviewing cyber security proposals that were presented last year. Meanwhile, in January a group of international shipping organizations, which included Cruise Lines International Association, Intercargo, Intertanko and the International Chamber of Shipping, released guidelines to help shipping companies prevent cyber attacks. The group’s guidelines to lower cyber security risks include: how to raise awareness of safety and commercial risks to shipping if no guidelines are in place; how to protect IT infrastructure and connected equipment; how to make sure users have appropriate access to information; and how to protect data flowing between the ship and shore-side offices.

Piracy

Piracy also remains an issue for the maritime industry with attempted pirate attacks on ships having moved from Somalia as a primary focus to Southeast Asia. According to the Singapore-based Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP), 183 actual or attempted attacks took place in Southeast Asian waters during 2014. This figure represents a marked increase from 150 in 2013 and 133 in 2012, and is the highest since 2006. The latest figures released by the International Maritime Bureau’s (IMB) Piracy Reporting Center corroborate ReCAAP’s findings and show a similar increase in attacks in 2013 and 2014. Since a total of 245 attacks took place worldwide in 2014, Asia now accounts for up to 75% of all piracy and armed robbery (PAR) incidents in the world, up from 60% in 2013.  Additionally, concerns have been raised over the fact that pirates are beginning to identify vulnerabilities in cyber defenses.

Extreme Weather Conditions

In the last year, three of the five largest vessels lost were due to bad weather. Exceptional weather events are becoming more commonplace, bringing additional risks and disruption to supply chains.

The most recent loss was the El Faro, which sunk as it approached the Bahamas en-route from Florida to San Juan, Puerto Rico during Hurricane Joaquin, and killed 33 crewmembers.

Roanoke Trade specializes in insuring transportation and logistic service providers – from providing coverage for cargo loss to offering cyber insurance. For more information about our portfolio of coverages, please contact us at 1-800-ROANOKE (800-762-6653).