Y2K: The Truth W Consequents Ship From Samsung

It's the vacation of a lifetime — a wintertime cruise to a lush island paradise. What better way to ring in the New Year? If the year you will be ringing in is the year 2000, you may want to think twice about boarding the ship.

There is a good chance that the things that enable us to get up and go may go haywire on January 1, 2000. Like other modes of transportation that depend on computer-driven systems or embedded microchips to function, many passenger and commercial ships may be set adrift by the Year 2000 (Y2K) problem on that day.

At one second after midnight December 31, 1999, computers and applications that use two digits to keep track of the date will recognize "00" as the year 1900, rather than 2000. That means that programs and systems on ships, at port facilities and in the satellite-driven Global Positioning System (GPS) could malfunction or stop working altogether.

Although it's difficult to assess the exact impact of the Y2K problem on the cruise ship and commercial shipping industries, it will be significant. On-board systems, navigation, fueling, scheduling, passenger ticketing, inventory, cargo tracking, information systems, management operations — nearly every area of the cruise-line and shipping business —could be affected.

Engines could shut down, ships could stray offcourse and collide, passengers may find themselves stranded at sea and cargo containers will sit on the docks, waiting to be loaded onto ships that can't get into port.

Or nothing may happ e n at all. The real Y2K problem is not knowing whether you have a problem. And that poses a threat to your passengers, your crew, your customers and your business. Whether or not a ship is vulnerable to the Y2K glitch generally depends upon its age, the age and origin of its on-board systems, the types of computer applications running those systems and the number of chips embedded in them.

A ship that was built in the 1970s, for example, is more likely to depend on its crew and fewer automated, more manual operations to make it sail. On the other hand, the newest ships rely heavily on state-ofthe- art technology and embedded chips that link onboard systems to each other and to on-shore systems, such as cargo handling and security systems and those that support refrigerated containers. Navigation; communications; engine and machine monitoring; electrical, air conditioning and heating systems — virtually everything that keeps a ship afloat and operating — may contain from one to hundreds of hidden, embedded computer chips and chips-within-chips.

It would seem reasonable then that the newer and more technologically advanced a ship is, the more Y2K-compliant its systems would be. Unfortunately, that isn't always the case. Like manufacturers in other industries, shipbuilders may have been unaware of, or did not consider, the Y2K problem until recently. Consequently, a 10-year-old ship may face as many problems as one that is years older. And there is concern among industry experts that even the newest ships may have compliance issues.

The bad news is that, although not every embedded chip is supporting a critical application or function, every system on every ship is likely to contain one or more microchips whose internal clocks are counting down to a potential Y2K breakdown.

The good news is that, even though there is less than a year until the year 2000, identification and remediation of potential systems failures are still possible.

What happens if you can't find them all? At best, a few inconveniences as some systems shut down. At worst, a disaster that can destroy your business. In any case, it's imperative that your organization be prepared to protect passengers and crew, and minimize financial losses.

The first step to dealing with potential Y2K problems is to take the issue (f seriously! There are still too many people who believe that Y2K is only a computer problem, or that it won't affect ships, or that their normal systems' back-up procedures will resolve or prevent a problem on their ships. Imagine the worst, then design and implement a Y2K identification and remediation program. Identify everything that may be impacted, including oil-board and on-shore systems and procedures. Test each item to determine whether and how it will be impacted. Testing should include changing the date and the number of digits in the date, since applications are often written using different "date lengths," usually four, six or eight digits.

That means you must do more than advancing the date on the ship's master control system to January 1, 2000, or manually changing the internal clocks on those systems where the clocks are accessible. You must verify that the date change is communicated to each and every subsystem on the ship. Check the engine room. Check the propulsion system.

Check the control and alarm systems. Check the auxiliary controls.

One of three things will happen: The systems will stop, they will spit out erroneous data or they will continue to function normally. This will give you an idea of the extent of your Y2K exposure, and help you decide how you're going to minimize it.

As companies proceed with Y2K compliance efforts, some treat a minor glitch as a major failure. Others believe that as long as they can generate revenue and satisfy customer needs without jeopardizing safety, they are in compliance.

Cruise lines and shipping companies should develop, implement and document a detailed Y2K plan. Contact the manufacturers and vendors of equipment that has been identified as having potential Y2K glitches for possible fixes. Develop contingencies for every possible failure and have back-up operations in place where practi- Mark These Dates, Too January 1, 2000 isn't the only day that may impact the shipping industry.

According to the United States Maritime Administration, some computer programs may use a "99" as an exception code, meaning the date is unknown or unidentified.

Consequently, other critical dates include January 31, 1999 and September 9, 1999 for some PC internal operating systems; August 22, 1999 for Global Positioning Systems; and February 29, 2000, since 2000 is a leap year. Test your systems for each of these dates.

Additional information related to Y2K issues and critical dates for the maritime industry may be found on the Maritime Administration's Year 2000 page on the World Wide Web at: http://marad.dot.gov/whats_new/y2k.html January, 1999 19 cal. Don't forget the external systems that your operations are dependent on, such as fuel and food suppliers and freight forwarders you do business with.

It's easy to underestimate potential problems, and the amount of time and money needed to correct them. And as January 1, 2000 approaches, your options decrease considerably.

A Y2K assessment and systems' audit reviews can mitigate business failures of Titanic proportions. Charles W. Gill is a partner with KPMG LLP and the national leader of KPMG's Maritime Industry practice in New York City; James A. Trautwein is a manager in KPMG's Information Risk Management practice in Fort Lauderdale, Fla.