Filed Under:Markets, Reinsurance

Leveraging Hindsight into Foresight: Lessons from the Titanic

The Titanic departing Southampton
The Titanic departing Southampton

On April 15, 1912, a deadly combination of human error, engineering issues, hubris and fate conspired to bring down the Titanic—a state-of-the-art passenger ship that was touted as “unsinkable.”

It’s been almost 100 years since that fateful day. But although risk management and technology such as radar and GPS have improved the odds, the maritime industry still faces unique challenges driven by the continued growth of worldwide shipping and the cruise ship industry.

Tim Donney, Global Head Marine, Risk Operations, Allianz Risk Consultants

Prior to 1990, regulations were only related to vessel construction, maintenance, repair and engineering fixes. Now there is a focus on company management and human factors such as policy and training in procedures on the ship, and shoreside-management responsibility toward ship operations. The U.S. Coast Guard develops safety standards within the U.S., technically applying only to U.S. vessels, and The International Maritime Organization (IMO), which is a U.N. organization, develops regulations for maritime shipping. The maritime industry has been driven be shipping disasters. The safest are oil vessels; The Oil Pollution Act of the 1990s was a response to the Exxon Valdez spill and implemented local standards, and the coast guard was considering a double hull. One of OPA’s provisions was that any new builds would have to have double-hull construction, and even existing vessels would have to be retrofitted within 20 years.

John Barnwell, global marine head, Americas, Allianz Global Corporate & Specialty (AGCS)

Even with the premier costs and technically advanced vessels, there is still the potential for major losses or large disasters. Risk managers have to take into consideration the unthinkable, even with the recent grounding and near sinking of the Costa Concordia. These are rare but when they happen, the results are catastrophic, have a financial impact to the company and damage the brand name. 

Barry Tarnef, senior loss control specialist, Chubb

I’m not a proponent of applying what we know now to what happened 100 years ago because the state-of-the-art is different today. But my question to White Star Line would be: What was your idea of a worst-case scenario? What was your maximum possible loss?

Steve Lako, Vice President, Global Loss Control, Allied World

It is not so much about modern risk management steps. It is about a much greater and unwavering commitment to safety. Let me focus on two areas, ship speed and lifeboats.

A.V. Riswadkar, product liability director, Zurich Services Corporation

There were many lessons, from the "flawed" ship design to the quality of rivets; but analysis of a few key ones shows that the combination of competitive business pressures and inadequate emergency response crew training resulted in compromising of risk management efforts. The potential for human errors assured that the voyage of Titanic was a “disaster waiting to happen.”

Sarah E. Pacini, vice president of risk management and insurance, Advocate Health Care

I think it goes with the old adage, “slow and steady wins the race.” This is especially relevant to the fall of the Titanic—and especially when it comes to listening. At the time, there were lots of people voicing their concerns, especially to front-line leaders. In today’s environment it is important to listen to our leaders and have them listen to concerns when determining the trajectory of your organization. 

Kevin McPoyle, CIC, President and co-founder, KMRD Partners, Inc

One modern risk management step would have been a communication requirement among the crew, particularly the decision makers, regarding the decision to choose "speed over ambition.”  As history tells the story, the crew was encouraged to "go fast" to set a trans-Atlantic crossing record. The captain ignored reports of an ice field on the chosen route, because it was the best, fastest route. As a result, the captain assumed more risk than was required to arrive at the ship’s destination in New York City.   

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