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Consulting Matters Feature
Rethinking resiliency for port operations Now more than ever, port operators need to account for isolated, disruptive events that have the potential to impact not only their operations, but ultimately the supply chain and profitability. World trade increasingly relies on longer, larger and more complex port facilities and systems, with maritime transportation a vital trade backbone. As such, when ports experience failures or disruption, its big news. For example in June 2018, the rollout of a new terminal operating system at the Port of Felixstowe, one of the largest ports in the world and the busiest in the UK, caused significant disruption and decline in productivity issues that reportedly took more than a month to fix. Five years earlier, the NotPetya cyberattack that hit Danish shipping giant Maersk cost the company more than USD 200 million and led to a temporary shutdown of the largest cargo terminal in the Port of Los Angeles. These are just two examples of the increasing risks and challenges facing ports around the world, and the pressure to prepare for and respond promptly to threats beyond ‘business as usual’ conditions is mounting. The most common maritime risk management issues have traditionally been relatively consistent, if not predictable: natural disasters, mechanical failures and human error. Now however, the incredible growth of international trade, the impact of climate change and the introduction of new technologies means the risks are broader and evolving. The growing list of potential risks for ports includes:
The most common maritime risk management issues have traditionally been relatively consistent, if not predictable: natural disasters, mechanical failures and human error. Now however, the incredible growth of international trade, the impact of climate change and the introduction of new technologies means the risks are broader and evolving. At the same time, ports are facing increasing pressure to reform; if they haven’t already done so, many ports will need to evolve rapidly from being traditional land and sea interfaces to providers of complete logistics networks. Without effective risk management and business continuity procedures, the disruptions or shut downs resulting from such events and the negative impacts of rapid transformation can potentially cause significant financial as well as reputational damage. The outcome can also be management and Board exposure to claims and possible prosecution. How can you achieve effective contingency planning and resilience?
The simple ‘plan, do, check, act’ approach to contingency planning is a universal concept that has been successfully applied around the globe, but like any system it has to be managed and maintained. The first step to developing an effective contingency plan is to assess the existing business operation to expose the inputs, decision points, processes, information, and connections that produce the outputs and outcomes. In many cases, system weaknesses stem from gaps or discontinuities within these areas, or due to hierarchical system structures and broad dependences. The following illustrates the first few steps a business can take to embark on the journey of effective contingency planning:
Feature Consulting Matters
Importantly, the contingency plan should aim to identify a process that can be followed to manage a return to normal operations, rather than identifying individual mitigations to known operational risks. This process should include identifying who has been delegated what authority, the criticality ranking of each business operation so that priorities can be established, who the stakeholders are that need to be contacted, and the responsibilities of individual departments across the business. So that the system provides a cyclic process, it must incorporate a testing and monitoring process that can identify the effectiveness of the continuity strategy, which may include a mock run through of an emergency event. A mock test is particularly important given that some of the scenarios being planned for may only occur once within our lifetime; however we must be confident that the intended response will be effective and achieve the goals. In many examples, it is more beneficial to take preventative steps to avoid loss of business operations than to take corrective steps following failure. It will depend on the nature of the failures and the extent of the impact, with a balance between the ongoing cost of prevention and what might be the one-off cost of recovery.
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Having a well-defined strategy in place will enable the business to proactively respond to a disruptive event. The strategy will also provide confidence to your clients and the local community the business serves, that there is a coordinated and tested approach which will minimise the length of the disruption and its impact during an event. GHD Advisory’s team is well versed in crisis and emergency management, disaster recovery and business continuity (aligned to the ISO22301 standard), our team can advise on suitable organisation, develop functional plans and deliver high quality training, all in line with reputable incident/emergency management systems, such as AIIMS, NIIMS and ICS. Matt East Tristan Anderson GHD