Cyber risks are emerging as a new threat for the shipping sector even as ship losses have sunk to their lowest level in a decade, Allianz Global Corporate & Specialty concluded in a new study.

“Cyber risk may be in its infancy in the sector today, but ships and ports could become enticing targets for hackers in the future,” Rahul Khanna, Global Head of Marine Risk Consulting for AGCS, said in prepared remarks issued with Allianz’s third annual Safety and Shipping Review 2015.

“Companies must simulate potential scenarios and identify appropriate mitigation strategies,” Khanna said.

Why are cyber risks rising? They are becoming a bigger issue in the shipping sector due, in part, to the increased use of e-navigation, said Sven Gerhard, global product leader of Hull & Marine Liabilities for AGCS.

“A cyber-attack targeting technology on board, in particular electronic navigation systems, could possibly lead to a total loss or even several vessels from one company,” Gerhard said in prepared remarks.

The AGCS report asserted that cyber criminals might target a major port, an action that could interfere with containers or confidential data, or close terminals outright. If this happens, shippers could be left with major business interruption costs as well as liability or reputational losses.

At the same time, the ACGS report – which looked at reported shipping losses of more than 200 gross tons – offers plenty of good news.

There were 75 large ships lost globally in 2014, but that was down by 32 percent compared to 2013. The number landed lower than the 10-year loss average of 127, ACGS said.

Broken down, 17 ships produced total losses in South China, Indo China, Indonesia and the Philippines. Twelve ships faced a similar fate in Japan, Korea and North China. According to ACGS, cargo and fishing vessels accounted for more than half of all losses.

More details from the ACGS report:

  • 2,773 shipping incidents (casualties) took place globally through 2014, including total losses. The East Mediterranean and Black Sea region, the British Isles, North Sea, English Channel and Bay of Biscay were among the major hotspots.
  • Seven passenger ships were lost during 2014, reflecting nearly 10 percent of total losses. ACGS said the trend should elicit concerns about training and emergency preparedness.
  • The increased size of container ships and floating offshore facilities could lead to larger losses exceeding $1 billion.
  • Other emerging risks include smaller crews, Arctic shipping, geopolitical uncertainty and the increase in human trafficking by sea.

Click here to view the full report.

Source: Allianz Global Corporate & Specialty