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Cyber attacks and megaships pose risk to falling ship losses: Allianz

Cyber attacks and megaships pose risk to falling ship losses: Allianz
The 75 reported losses reported in 2014 make it the safest year in shipping for a decade, but "cyber risks" and the ever-increasing size of box ships and offshore assets could see a rise in losses over $1bn, according to Allianz Global Corporate and Specialty (AGCS).

In its third annual Safety and Shipping Review, the insurer highlighted an over-reliance on electronic navigation devices such as ElectronicChart Displays as a rising cause of losses. Furthermore, the lessons learned from accident reports are not being reliably fed back into training courses.

The headline figure of 75 ships over 100 gross tons lost in 2014 is a 32% improvement on 2013's 110 losses, and ahead of the 10-year average of 127. The average age of vessels lost during 2014 was 29 years.

South China, Indo-China, Indonesia and The Philippines accounted for 17 of 2014's losses, followed by Japan, Korea and North China which saw 12 losses during the year. For every loss in the Southern Hemisphere there are seven in the Northern Hemisphere.

Foundering remains the top cause of loss, with 47% of the 1,271 losses in the past 10 years attributable to sinking or submerging. The second most common cause is running aground, which accounts for 20%, but has fallen steadily since 2011.

For all casualties, including total losses, the British Isles, North Sea, English Channel and Bay of Biscay top the leaderboard with 4,381 of the 24,545 casualties over the past 10 years occurring in the region.

The report also assessed potential risks as automation and reliance on computer systems becomes more common in shipping. “Cyber risk may be in its infancy in the sector today, but ships and ports could become enticing targets for hackers in future. Companies must simulate potential scenarios and identify appropriate mitigation strategies,” said Rahul Khanna, global head of marine risk consulting.

The industry trend of building larger vessels may also increases risk. “Larger ships can also mean larger losses. The industry should prepare for a loss exceeding $1bn in future featuring a container vessel or even a specialized floating offshore facility,” said Dr. Sven Gerhard, global product leader hull & marine liabilities. On top of the vessel and cargo losses, there are increased exposures to environmental costs and significant costs in salvage and removal.