Moore Stephens: Shipping Companies Require Improved Risk Management

Moore Stephens says not enough shipping companies are utilising sufficient risk management procedures.

Moore Stephens UK (Moore Stephens), in its second annual Shipping Risk Survey, says that not enough shipping companies are utilising sufficient risk management procedures.

"Shipping is a risky business, one in which an unwillingness to take any risk whatsoever sometimes represents the biggest risk of all. But that does not mean that the industry can afford to ignore or underestimate risk," said Michael Simms, Partner for Shipping & Transport at Moore Stephens.

"It must achieve the right balance between risk and reward, and especially so when reward levels are low, as they are at present. The rewards may vary, but the risk will not go away."

Moore Stephens' survey respondents provided an average rating of 6.6 out of 10.0 to the extent to which enterprise and business risk management is contributing to the success of their organisation, down from 6.9 last year.

Meanwhile, 23 percent of respondents returned a rating of 8.0, compared to 26 percent last year, and 70 percent provided a response of more than 5.0 out of 10.0, compared to 74 percent in 2015.

Overall, respondents provided a rating of 7.0 out of 10.0 for the extent to which enterprise and business risk was being managed effectively by their organisations - a rating that remains unchanged from last year.

Further, survey respondents said that they believe that the level of risk posed presented by factors impacting their business would remain largely unchanged over the next 12 month period, except with regard to tonnage supply and competition, which respondents said they believe present the potential for increased risk.

"The survey revealed that risk is being managed effectively within a high percentage of those organisations which participated in the survey," explained Simms.

"It is nonetheless disappointing to find that confidence in the level to which enterprise and business risk management contributes to the success of shipping organisations has fallen slightly in the past 12 months. So, too, has high-level involvement by senior managers."

In June, Moore Stephens' Shipping Confidence Survey shows a rating of 5.1, recorded on a scale of 1 to 10, up from a record low of 5 reported in March.