Insurance Insights: WTW Launches Forum to Mitigate Growing Port, Terminal Risk
Ports and terminal operators are entering a new era where the operational threats they face – both old and new – will make a return to ‘business as usual’ increasingly unlikely, even once the pandemic finally subsides.
Transition to new technologies and digitally enabled systems, addressing the impact of climate change, defending against cyberattacks and shifting geopolitics will couple with traditional supply chain and operational risks to change the face of the sector.
According to Global Port Trends 2030, Deloitte’s most recent report on the sector, the competitive position of port stakeholders and their ecosystems will be altered significantly from today’s models.
As competition for prime land near consumer markets intensifies, the emphasis for operators is increasingly shifting from expansion to improving operational efficiency on the existing waterfront.
In one snapshot of how that will play out, global shipping consultancy Drewry recently forecast investment in container ports to slow in the post-COVID economy; it predicted that the pace of expansion will fall by at least 40% in the next five years.
According to Deloitte, with less suitable land available for expansion, container ports will transition to investment strategies that increase the productivity of existing spaces, support operational sustainability (in response to regulatory and social demand for lower carbon footprints) and increase collaboration between ports.
This implies an accelerated adoption of the kind of ‘smart’ technologies that help operators to better understand the operational impact of past events and better predict the impact of future ones.
The adoption of new ‘smart’ technology will be a primary facilitator of the transition to a more productive future, but these solutions will not come without adding risks: every device that connects to a port’s digital community represents a new entry point for the ill-intentioned into mission-critical operating systems.
Recent reports seem to indicate that cybercriminals – particularly those using ransomware – have discovered what we in the industry have always known: the maritime supply chain is both strategically and economically important to societies, big and small.
Simply put, the criminal element is increasingly recognising that attacks against critical supply chain infrastructure such as ports and terminals are more likely to result in ransoms being paid, because those operations are vital to the health of global and local economies.
As port operators’ connectivity expands in pursuit of better productivity, their stakeholders, including financiers, are going to insist on seeing evidence that cyber risks are added to the growing list of business threats that have been identified and are being addressed.
Securing capital to keep pace with technological change also will hinge on their strategies for handling ESG (environmental, social and governance) risks, particularly regarding climate change, and global threats arising from an increasingly unpredictable geopolitical arena, such as trade embargoes, tariffs and sanctions.
With the threat landscape destined to add several new layers of complexity for the next decade, operators will need additional resources and tools, especially relating to intelligence gathering and analyses of global risk trends and solutions.
In response, Willis Towers Watson, one of the world’s leading insurance brokers to the maritime sector, has just launched a dedicated risk forum for ports and terminal operators.
Modelled after our highly successful Airport Risk Community (ARC), the forum acts as a members’ network, designed to identify risks and the most effective responses in the market. It collaborates with the Centre for Risk Studies at the University of Cambridge’s Judge Business School, a long-term Willis Research Network partner, to develop a continuously updated index of risks to the ports and terminals sector. The Index itself will be launched next year.
The forum provides an events-based networking group through which knowledge and expertise can be shared to create a stronger and more resilient industry. Our vast global experience as advisors, brokers and solution providers to industry has taught us that the harnessing of collective wisdom is an expedited path to finding effective solutions.