Transcript Slide 1
Assurance of Security in Maritime Supply Chains:
Conceptual Issues of Vulnerability and Crisis Management
Dr Paul Barnes & Mr Richard Oloruntoba
School of International Business Queensland University of Technology, Brisbane, Australia
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Overview of Presentation
• • • Aspects of Maritime Security - Old & New Supply Chain Threats - Economic Impacts • • A Conceptual Framework Systemic & Organisational Vulnerability Options for Crisis Management & Vulnerability reduction Issues for further Research and Inquiry
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• In October 2001, authorities in the southern Italian port of Gioia Tauro discovered an unusually well-equipped and neatly dressed stowaway locked inside a shipping container.
• Italian police named the stowaway as Rizik Amid Farid, 43, and said he was born in Egypt but carried a Canadian passport.
He was found to be carrying: – – – – – – two mobile phones, a satellite phone, a laptop computer, several cameras, batteries, airport security passes and, an airline mechanic’s certificate valid for four major American airports.
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Security in Maritime Trading Systems
• • •
What are the Challenges
?
Approx. 90% of world trade moves in shipping containers
- Any reduction of throughput is likely to have a significant impact
on regional and national economies.
Global business enterprise, and trading systems in particular, are vulnerable to terrorist incidents
- Perturbation of maritime supply chains will impact on
movements of material across large sections of the network.
The asymmetry of approach in modern terrorism can make use of systems of commerce
- Maritime trade as a vector for terrorism. a university for the real world R
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Further issues of Importance
The Management of Crises
(including prevention) is critical • • Crises have become Normal: often suddenly emergent With major consequences across many sectors o o
Exxon Valdez Barings Bank
o
Enron
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9/11
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Bali bombing
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Madrid bombing
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Why does do these issues matter?
• Could the incidents have been prevented or deflected?
• Could their consequences have been better mitigated? • Could they have been anticipated?
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Maritime Security
- Issues of Complexity
Cargo
• Using cargo to smuggle people and/or weapons.
• Using cargo to transport conventional, nuclear, chemical or biological weapons.
External Impacts Vessels
• Using the vessel as a weapon • Using the vessel to launch an attack.
• Sinking the vessel to disrupt infrastructure • Loss of life and damage to property.
• Disruption to trade flows.
• Additional cost of transport due to additional security measures
People
• Attacking the ship to provoke human casualties.
• Using the cover of seafarer identities to insert terrorist operatives.
Money
• Using revenue from shipping to fund terrorist activities.
• Using ships to launder illicit funds for terrorist organisations.
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Maritime Security
Estimated ISPS Code Costings
• • • • Maritime carrier companies Initial Cost (million USD) $1170.6
Yearly Costs (million USD) $725.6
• Ships (requirements) Initial Cost (million USD) $757.4
• Yearly Costs (million USD) $4.3
Ports Initial Cost (million USD) $55.8 Yearly Costs (million USD) $1.6
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Maritime Security
Container Security Initiative
• • • Participants are expected to: Establish security criteria to identify high-risk containers. Pre-screen those containers prior to arrival at US ports
- Involving the deployment of American Customs staff in foreign ports.
Develop and use of ICT enabled and secure containers
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Maritime Security
Customs-Trade Partnership Against Terrorism
• • Participants are expected to: Conduct a comprehensive self-assessment of supply chain security using the C-TPAT security guidelines jointly developed by U.S. Customs and the trade community. The guidelines encompass: – – – –
Procedural Security, Physical Security, Personnel Security, Education and Training, Access Controls, Manifest Procedures, and
Conveyance Security
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Security Initiatives across Supply Chains
Producer Composition
Trans
Customs (Port)
Maritime
Customs (Port)
Trans
Decomposition Buyer ISPS CSI C-TPAT a university for the real world R
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• • • •
Supply Chain Impacts
– Reduced Continuity
An industrial dispute (late 2002) impacting 29 US West Coast ports involved > 200 ships. A total of 300,000 containers remained unloaded and rail and other inter-modal shipments were delayed across large sections of the transport network. Resulting in filled warehouses, freezers and grain elevators on both sides of the Pacific Ocean, costly mid-ocean diversions of maritime traffic to other ports and businesses, laid-off workers and/or reduced production. Estimated loss from this disruption on Hong Kong, Malaysia and Singapore alone was estimated to be as high as 1.1 % of nominal GDP.
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SCI
– Regional Economies
• A 2001 EIS covering the St. Lawrence Seaway and related waterways, ports and their inter-modal connections, vessels, vehicles and system users demonstrated the importance of an efficient maritime trading system on regional competitiveness.
Up to 152,508 jobs are in some way related to the Seaway; • • 192 million tonnes of cargo moving on the US side of the great lakes seaway system in the previous calendar year (2000); USD$1.3 billion of purchases were made by firms providing transportation services and cargo handling services in the great lakes region (supporting approx. 26,757
indirect j
obs)
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SCT - Economic Impacts
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St. Lawrence Seaway • USD$3.4 billion of business revenues generated for firms providing transportation and cargo handling services - on the U.S. side of the great lakes seaway system (excluding the value of the commodities moved); • The generation of USD$1.3 billion in federal, state and local tax revenue (2000); • USD$1.3 billion spent on purchases for a range of service-related deliverables (i.e. diesel fuel, utilities, maintenance and repair services) by firms providing the cargo handling and transportation services.
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A Framework
Systemic & Organisational Vulnerability
A systems approach to understanding incident causation examines relationships between all aspects of events and provides a means to look more deeply at why the events occurred by focusing on the
interactions among system components .
Such an approach takes a broader view of what went wrong with the system’s operation or organisation thus contributing to an incident.
The emphasis differs to that of industrial/occupational safety models (unsafe acts or conditions) and reliability engineering emphasising failure events and the direct relationships among these events.
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Systemic & Organisational Vulnerability
Empirical Findings
• • • • Crisis Prone organisations Cultural beliefs about invulnerability Non-existent or ineffective internal control mechanisms Senior managers not trained in decision making under crisis situations Contingency planning inadequate or non-existent • • •
Accidents in highly complex systems
‘Cook’ slowly Occur suddenly Often Warning signs existed
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Systemic & Organisational Vulnerability
•
Application of the Concept
Organisational Complexity
Rigidity in thinking
- Restricted expectation about contingencies and their consequences - Inflexibility in considering alternative options & choices for mitigation •
Lack of Decision Readiness
Key decision makers not practiced in emergency decision making •
Information Distortion
Attenuation and filtering of information to key decision makers
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Systemic & Organisational Vulnerability
Network Complexity
The Globalised Economy
• • Transport Systems Road, Rail, Air, Maritime System of Systems Supply Chains
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Systemic & Organisational Vulnerability
Decision making in Crises (Assumptions) They will be impacted by the presence of: - Uncertainty / Ignorance - High Decision Stakes - Extreme Systems Complexity
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Systemic & Organisational Vulnerability
• • • • •
Critical Infrastructure Protection
Loss of interoperability & interconnectivity (data, networks) Interdependency of Infrastructure Power supply (Generation & transmission) Telecommunications (Soft & hard) Transport systems (Road, rail, air, water)
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Vulnerability
A susceptibility to change or loss as a result of existing
functional or
organisational or practices or conditions.
Type 1
The operational complexity within a port: encompassing the transport node infrastructure and onsite operators
Type 2
An attribute of the maritime movements themselves (with ports as nodes of the system) and global logistics management practices that underpin
supply chains.
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A conceptual Frame Type 1 and Type 2 Vulnerability Type 2 Type 1 a university for the real world R
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Type 1 or Type 2 ?
– The Exxon Valdez
Contingency Planning • The National Oil and Hazardous Substances Pollution Contingency
Plan
• The Coast Guard’s Captain of the Port Prince William Sound Pollution
Action Plan
• The Alaska Regional Oil and Hazardous Substances Pollution
Contingency Plan
• The State of Alaska’s Oil and Hazardous Substances Pollution
Contingency Plan
• The Alyeska Pipeline Service Company’s Oil Spill Contingency Plan for
Prince William Sound
• The National Oil and Hazardous Substances Pollution Contingency
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Assertion:
The current Mandated and voluntary Maritime Security initiatives are more suited to preventing marine vectored terrorism rather than resolving the consequences or improving the resilience of supply chains and port infrastructure and thus sustainability of trade.
What is needed?
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Enhanced capacities for Crisis Recognition
A robust Crisis Management capability and capacity includes skills: • •
Environmental Scanning
(Detection of weak signals)
Emergency Management Escalation Triggers
(Incident or issue recognition) leading to rapid consequence analyses (in the context of high uncertainty) •
Crisis Management Decision-making Capacity
(Separate to routine business decision making structures)
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• • •
Development of Crisis Management skill-sets
A capability in applying foresight (via interdisciplinary teams) to issues that can limit achievement of organisational and business goals.
Robust analytical and conceptual frameworks of security risk management and corporate governance appropriate to the functions and purpose of an organisation.
– – – – Prevention - recognition systems for emerging crises; Preparation - planning for the unknown; Response - making effective decisions and having them implemented; Recovery - restoring normality and learning. Both preventing and preparing for crisis-situations presumes a deep and effective understanding of the way in which the ‘unknown’ factors and conditions can manifest.
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• •
Other Management Options & Strategies
Additional corporate strategies would logically include ensuring transparency and trust amongst stakeholders, employees and especially government(s) The Secure Trade in the APEC Region (STAR) Initiative for example, seeks to strengthen maritime security against terrorism while boosting trade efficiency
(including) :
– – – implementation of the ISPS Code and encouraging implementation of common standards for electronic customs reporting common standards for the collection and transmission of advanced passenger information to prevent the fraudulent use of travel documents partnerships between government and business at the national and international level to mitigate terrorist or criminal threat throughout the supply and logistics chain.
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Issues for Research & Inquiry.1
Higher Order Issues:
• How might the variable implementation of the CSI and C-TPAT program impact on global sourcing strategies in particular: – – time-sensitive supply; reliance on single-source or geographical location suppliers?
• Would more complete implementation of the CSI and C-TPAT programs separate countries unable to afford the cost of implementation from access to trade opportunities and thus affect the notion of the benign and equitable benefits of globalisation?
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• • • • •
Issues for Research & Inquiry.2
Analysis of the capacity for interactive complexity within critical infrastructure at hub ports - including interface zones Details of the nature and organisation of current security risk management functions and governance systems in place in a sample of hub ports Evaluation of the variation across ‘high frequency low consequence’ and ‘low frequency high consequence’ incident scales at major ports (thus facilitating a mapping of the Type 1 and Type 2 vulnerability) Appraisal of the potential impact of full integration of port and trade route crisis management capacities on maritime insurance premiums; Identification and allocation of costs/benefits of the provision of crisis management capacities across industry/client stakeholders .
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Issues for Research & Inquiry.3
Critical Network Events
Because of the cascading nature of these events, institutions within marine trading would be unlikely to face single incidents but rather systemic failures appearing concurrently. Unexpected convergence of factors impacting on human-systems can generate effect propagation via connectedness and interoperability of these same systems.
• How might interdependencies and linkages - across Type 1 & Type 2 vulnerability – generate tendencies to create or propagate major discontinuities within maritime trading systems? • What forms of investigation or analyses would provide enhanced understanding that extends beyond the grasp of competent managerial authority?
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Closing thoughts
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