Risk Management

Risk Management




Risk Management

Risk Management


The risks faced by enterprises are getting more diverse and complex. With the threats of globalization, geopolitical conflicts, diseases, and climate change, how to comprehensively grasp and manage major risks that have major impact on operations and profitability has become a crucial issue.

Shih Wei Navigation makes detailed lists of the opportunities and risks faced by the shipping industry and the corresponding strategies and actions taken based on our niches for every relevant department and unit targeting at the opportunities and risks in accordance with the scope of work. Risks related to ship operation are handled in accordance with relevant policies and procedures of International Safety Management (ISM).

The board of directors serves the highest guiding unit for risk management proposals. Every year after the compilation of the Sustainability Report completes, the Report is submitted to the board of directors. The content of the Sustainability Report includes risk management and climate risk management (see 3.3 Climate Change Adaptation and Climate Risk Management for details). On November 10, 2022, the Administration Department reported to the board of directors the promotion status of sustainable development and future strategies, planning, goals, and management approaches, which would be supervised by the board of directors. It is scheduled to promote the introduction of the risk management system in 2023. In the future, we hope to establish a task force on Risk Management to fully grasp and integrate various risk management issues in a systematic manner.

Risk Identification


In accordance with the principle of materiality and by referring to the TCFD suggestions, five major risk aspects were constructed, and 26 risk topics were identified. Coping strategies targeting at high risks were proposed. For detailed information concerning climate risk, please see Chapter 3).

Strategy Risk Financial Risk Operating Risk Compliance Risk Climate Change Risk
Strategic risk Credit risk Major labor safety incident More stringent environmental regulations Carbon tax/fee Cap and trade
Increase ship utilization Liquidity risk Navigation risk Policies and regulations that restrict the carbon emissions Rapidly changing customer trends
Investment risk Market risk Safe transport of goods Increased insurance costs
Use green financing US dollar collapse Transnational operation, deficiency found by port state control The exacerbation of extreme climate change intensifies the impact of weather and ocean phenomena on Earth
Replace and update existing ship equipment Operational impact of COVID-19 or other infectious diseases Sea level rise
Talent recruitment and turnover risk
Information security risk
Reputation risk
Damage to the Company’s rights and interest for violation of integrity management behavior
Rising prices of oil and raw materials caused by intense geopolitics

High Risks and Countermeasures


Major Risk Items Significance and Impact Coping Strategies
Navigation risk
  • Pirate attack
  • Maritime safety
  • Bad weather, improper human operation (including improper dock loading and uploading) that causes the ship to capsize, causing ship collision damage, endangering the safety of the crew members, cargo falling into sea, customer cargo loss and other transportation risks.    
  1. All ships shall ensure the operation of the distress system is smooth in accordance with the Ship Security Plan (SSP)
  2. The crew members will carry out drills for various special situations (such as anti-theft) during the annual ship-shore interaction to ensure that the crew members can have appropriate on-the-spot response and contingency measures in the face of emergencies
Transnational operation, deficiency found by port state control Port State Control is a regulation formulated by the IMO that requires all countries to inspect foreign ships to verify whether the ship and the status of its equipment meet the requirements of international regulations to ensure the safety of the ship operation.
  1. Urge the crew members to comply with the regulations of the flag state and local regulations to smoothly pass inspection
  2. Each department has to understand different laws and regulations in different places, and English communication skills have to be improved to respond immediately and for support
  3. Keep close contact with the port agents and ships to closely understand the situation
Operational impact of COVID-19 or other infectious diseases
  • Higher quarantine standards at ports and terminals that lead to delays in shipping schedules
  • The crew member may be infected with COVID-19, causing the inability for the ship to dock, forcing the cargo to be unloaded and increasing the costs of transshipment
  • Many countries prohibit crew members from disembarking and embarking, that will make crew members to fail to return home when the crew employment contract expires, leading to violations of international conventions
  1. Provide crew members with sufficient anti-epidemic materials to reduce the chances of infection. Prepare sufficient masks, rapid screening reagents, soothing medication and others. In case of a crew change, all crew members on board will be equipped with a full set of protective clothing, N95 masks, face shields, gloves and other epidemic prevention accessories. Crew members are also reminded to pay attention to their own protection before departure
  2. Maintain close communication with the port agents and pay close attention to the updates to get familiar with the situation in each country. This will enable the department to provide crew assistance and guidance in a timely manner. Due to the pandemic, pandemic prevention policies differ from country to country, and the crew replacement process is among the first to be influenced. Therefore, to ensure that the crews will be able to smoothly board the ship or return home for vacation when their contract expires, the department maintains close contact with local port agents and updates the latest staff replacement regulations.
  3. The departments of the Company also maintain smooth communication channels for requests/difficulties or coordination, aiming at accomplishing the tasks with the minimum costs
  4. Measures such as work from home (WFH), video conferences for interviews are taken
Rising prices of oil and raw materials caused by intense geopolitics
  • The Russo-Ukrainian War has led the increasing oil prices, which will lead to an increase in the price of marine lubricants as well as the operating costs
  • The tense situation in the Taiwan Strait may also cause the fluctuations of commodity prices. If a war breaks out, the operations will be interrupted
  1. Regularly hold tenders for lubricating oil contracts. Selection method: Select the best lubricating oil contractor by quantitative analysis and scenario analysis
  2. Replenishment operations: Lubricating oil replenishment needs to be flexibly arranged depending on the route of each ship and the port of call. Alternatively, the fuel costs may be passed on to customers based on the operational approach
  3. Continuing with digital transformation, the headquarters office is equipped with remote work and management capabilities to ensure uninterrupted operations
Carbon tax/fee Cap and trade Net zero emission by 2050 has become an international trend. IMO will have to adjust its carbon reduction strategies and set more stringent ones while relevant laws and regulations at home and abroad will follow the measures. In the face of EU’s upcoming Carbon Border Adjustment Mechanism (CBAM), the operating costs will inevitably increase.
  1. Promote GHG inventory and obtain external verification
  2. Promote various energy conservation and carbon reduction measures
  3. Ship equipment improvement of replacement
The exacerbation of extreme climate change intensifies the impact of weather and ocean phenomena on Earth Extreme weather causes failed weather forecasting, which increases the risk of sea navigation or becomes the cause of speed claim.
  1. Review the reasons on a ship-by-ship basis, and make timely revisions of the contracted ship speed, arrange ship cleaning, or include comprehensive considerations in the “for sale” list
  2. Introduce in-voyage monitoring and gather the analysis of the performance results of each ship every voyage as a reference for future response