For a maritime safety company that has just celebrated its fifth birthday, HiLo Maritime Risk Management has come a very long way. Originally set up by Shell Shipping, Maersk Tankers, and Lloyd’s Register Consulting in 2014, HiLo became an independent company in 2018. Over the last five years, its data-based safety model has attracted many leading shipowners and managers to share their safety data.
CEO, Manit Chander, explains the company’s origins. “Our founding partners capitalised on the fact that safety in shipping is in everyone’s best interest. We were set up to design a data-based model to predict high impact events and prevent accidents happening across these risk areas in the first place.”
“We came up with a vision of how we could get shipping companies to start sharing their internal data, much of which is commercially sensitive. We had to develop a system where data were kept confidential, with attractions for participants, benefits for data providers, but which preserved anonymity and confidentiality. We attracted a number of leading names, and are still growing our client base – up 19% over the last year.”
Today, the company has about 60 shipping company clients providing data from around 3,000 ships. The customer base includes some of the world’s largest container lines, leading ship managers including Anglo Eastern, Bernard Schulte, Scorpio and V Ships, and a number of energy shipping majors.
Effective risk management
“For these companies, understanding the risk profile of their entire fleet is an essential tool in their overall risk management strategy. They use it in their quarterly risk analysis to see which dangers and incidents are going up, which are going down, and what they can do in response,” Chander explains.
So how does the model work in practice?
At the outset, HiLo’s analysts identified 120 risks or ‘leading indicators’, as they are called. In the intervening five years, this number has more than doubled to about 250. Companies file their records quarterly, either by Excel spreadsheets or similar, or more conveniently with the HiLo app.
“As the data comes in,” Chander explains, “incidents are categorised into these leading indicators. Since we have a lot of data, we can see which risks need to be more carefully managed; which areas of ship operation need more attention and which new risks should be carefully monitored.”
For example, the incidence of allisions (defined as ‘one ship running upon a stationary ship’) involving large container ships and port infrastructure, such as quays or gantry cranes, has risen sharply in recent years. In the five years since the company was established, the global fleet of mega-boxships has more than doubled and the largest ships of 24,000 TEU+ are 40-50% bigger than the largest vessels in 2018. These vessels are now so large that navigators on the bridge may not be able to see their extremities, even on a clear day.
The data shows that the incidence of allisions has risen and the cost of individual incidents has multiplied. Operators of large container ships, therefore, should be aware of these trends and take action accordingly.
The pace of new leading indicators is unlikely to slow down any time soon. A whole array of new risks face shipowners and operators in the years ahead, conforming to the high impact, low frequency pattern that gave HiLo its name.
A multitude of new risks
New risks will evolve in an arena of new marine fuels – in handling, storage, supply systems, toxicity, and pollution, for example. Other risk areas include digitalisation, cyber security, operational issues such as ship stability and parametric roll, and shipboard fires.
Then, of course, there is the unfathomable human element – a growing shortage of experienced seafarers and a reduced intake of young talented individuals for whom life at sea still holds appeal. Treatment of seafarers during the pandemic led many of them to question not only their employers’ personnel management, but also the value of their life at sea.
Chander admits that the company’s principals must manage potential conflicts of interest in the business model very carefully. The providers of data – the shipowners and managers whose ships are on the system – would not participate if there were any danger of their individual data becoming available to third parties.
Anonymised data
The company does liaise with insurance providers, but very strictly on the basis of anonymised data, risk categories rather than specific incidents, and ‘lagging indicators’ as well as leading ones – in other words, specific areas of risk that are becoming less frequent. Cooperation with loss prevention experts at some P&I Clubs has proven useful for both parties, but any liaison is kept well away from the individual client managers.
The HiLo team is currently assessing potential new lines of business suggested by some of its clients. Chander describes them as ‘plug-ins’ and cites human reliability as an example. How can human behaviour be quantified to reduce error? What actions should be taken when a new people risk has been identified?
Chander concedes that expanding the business into new areas is a challenge. This unique type of safety analysis has developed despite the many potential conflicts of interest with shipping industry players. Therein lies its value.
“The beauty of the system is that we’re identifying weak signals that flag up risks that could multiply in the future, rather than having to wait for them to happen,” he says. “One of the reasons that we have been so successful is because the people who provide us with data are the same people who benefit from our analysis But we need their absolute trust too; the data must be one hundred per cent accurate or we simply can’t do our job properly. All in all, it’s a positive cycle, which is why it works.”