Thursday, 5 May 2011
French ships turn to armed guards in bid to stave off piracy risk
French cargo ships are increasingly employing armed security teams in a bid to protect themselves against the raised threat of piracy, according to experts at a transportation insurance conference in Cannes, France.
Somalian pirates
The controversial move to employ armed guards in piracy hotspots, such as off the Somalian coast, is a further cost for already pressured shipowners and ultimately those who trade around the world. But such moves can results in reduced insurance premiums, the experts added.
“Piracy is on a sharp rise, compared to previous years,” said Gilles Mareuse, the deputy general manager at Allianz Global Corporate & Specialty in France. “It's a phenomenon that only gets bigger,” he told the delegates that attended the third edition of Rendez-Vous de l'Assurance Transport, an annual meeting about transportation insurance organised by Féderation Française des Sociétés d'Assurances, FFSA, France's insurance association.
Mr Mareuse said that 156 pirate attacks were reported around the world this year by mid-April, of which 19 resulted in the kidnapping of vessels The most dangerous waters remain those off the coast of Somalia, where 107 of the attacks took place.
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The increased risk of attack has resulted in higher costs for shipping companies, including insurance, said Simon Delfau, the head of security at CMA CGM, the Marseille-based shipping group. “Ships have to pay an insurance supplement if they will approach Somalian waters,” he told delegates at the conference.
Whilst the use of armed private security agents only adds to such costs, Mr Delfau believes that companies have few other options to help their boats navigate waters such as the Indian Ocean.
Frédéric Gallois, the deputy general manager at Gallice Security, a specialised security firm, said that keeping a team of four armed agents on board a vessel can cost between $4,000 and $8,000 a day.
Paul Tourret, the director of Institute Supérieur d'Économie Maritime, ISEMAR, a research institute that specialises in sea-based economic activities, estimated that the extra costs to a ship due to the risk of piracy can reach up to $50,000 a day.
On top of higher fuel costs caused by the ongoing hike in oil prices, it only adds to the significant pressure on shipping companies.
The increased demand for security services has fuelled a boom in the market. Many companies with no reputation are offering their services at low prices, the experts said. But questions arise as to such firms’ ability to cope in the field.
Security managers must also consider the legal implications of maintaining armed staff on board their ships. Some ports, like Cyprus, do not allow the entry of boats with armed passengers. Others accept them, but with restrictions.
And obviously engagement between on-board security staff and pirates is a matter of concern. Shipping companies can find themselves embroiled in legal disputes, depending on how the hostilities develop and the jurisdictions in which the cases are being heard.
The full version of this story will appear in the June edition of Commercial Risk Europe.
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Risk professionals must adapt out of date approaches to maintain progress
The world is rapidly changing and old approaches to risk management may no longer be appropriate, Steve Fowler, Chief Executive of the Institute of Risk Management (IRM) told delegates at his organisation’s annual conference last month. Risk professionals must therefore adapt and embrace new techniques in order to remain relevant and continue their march up the corporate ladder.
