Shipping industry executives say the increased security threat from cyber and data privacy breaches is the number one risk to its sector, according to a new ranking released today by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.
According to Willis Towers Watson’s Transportation Risk Index the second- and third-most pressing risks affecting the shipping sector are globalization of the customer base, and third-party security vulnerabilities. Failure of critical IT systems, change in demand due to macroeconomic conditions and dependence on third-party suppliers are ranked fourth, fifth and sixth in the index, respectively.
“Our survey found the prolonged economic struggles of most shipping companies have made the maritime sector more sensitive to risk than other modes of transport,” said Ben Abraham, head of Willis Towers Watson’s Marine practice.
“Maritime transport providers perceive cyber and data privacy breaches as their top risk. But shipping companies are also heavily exposed to globalization. Nowhere is this more apparent than with the bankruptcy of South Korea's Hanjin Shipping. Its demise, stranding more than $14 billion in goods at sea, is a case study of the industry's interdependence.”
The risk ranking is based on interviews with 63 C-suite executives across the shipping sector globally, which includes ship owners, port and terminal operators and cruise operators. The respondents were asked to rank 50 risks according to their potential impact and how difficult each one would be to manage.
“Global shipping companies clearly face a complex, interconnected risk environment. Understanding your risks and knowing how to respond provide a competitive advantage,” added Abraham.