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Risks and Business Continuity Impacts of the Removal of the Indian Ocean High-Risk Area on the Shipping Industry: A Literature Review

The early literature on Somalian piracy gives much attention to the causes and origin of Somalian-based piracy (Duda & Szubrycht, 2009; Potgieter, 2008), both acknowledging that Somalia has been a ‘failed state’ since 1991 when the government collapsed, linking the political instability and the chaos within the country to the evolution of piracy. They also connect the illegal fishing activities in Somalian waters to the onset of piracy. Initially, the primary solution proposed was using international navies to mitigate the risk of hijacking (Potgieter, 2008). Duda and Szubrycht (2009) later discussed the escalating threat and the potential role of Private Maritime Security Companies (PMSCs). Despite being uncommon initially, PMSCs have gained prominence, especially in providing unarmed services (Liss, 2008). The International Chamber of Commerce (ICC, 2009) reported a significant rise in attacks, suggesting an increased need for such services. Liss (2008) hypothesized that as piracy threats intensify, the cost-benefit analysis of hiring armed security for vessel protection will become more attractive to shipping companies.

Struwe, 2012 highlights the initial reluctance of governments to approve ships registered under their Flag State to employ Privately Contracted Armed Security Personnel (PCASP) to protect their vessels. This reluctance can be attributed to a few reasons: the lack of a legal framework to govern the security companies and their contractors. There were concerns about potential legal repercussions, including liability issues, if using force led to unintended casualties (Hespen, 2014; Petrig, 2013). This fear was compounded when two Italian navy personnel shot dead two Indian fishermen while protecting an Italian-flagged commercial ship (BBC, 2012); secondly, there was a concern that having weapons onboard commercial ships could escalate violence (Struwe, 2012). Constructivism theory states that individuals create meaning through interaction with others. It suggests that people learn by constructing knowledge from existing ideas or experiences rather than passively absorbing information. This means that when it comes to understanding the role of PMSCs in providing security at sea, it is important to look beyond just what they do on paper and consider how their actions affect those around them both positively and negatively.

PMSCs provide various services, such as armed guards onboard ships, intelligence gathering about potential threats before departure, and training crew members on safety protocols while underway, all aimed at protecting vessels from attack or hijacking while sailing across international waters. Zhao (2022) argues that these measures are necessary for ensuring safe passage across seas plagued by criminal activity; there has been criticism over whether hiring armed personnel creates more risk than benefit due to increased violence associated with their presence aboard ships. On the one hand, outsourcing security provides benefits such as improved protection against pirates/terrorists who may target commercial shipping vessels carrying valuable cargo; however, there are also risks involved, which include escalation into violent confrontations between armed personnel hired by PMSCs and criminals looking for easy targets or ransom money. Additionally, there have been reports suggesting certain PMSCs lack proper regulation leading to incidents where innocent civilians were injured during operations conducted without adequate oversight. According to Struwe (2012), using PCASP onboard commercial ships should not be the long-term answer to combat piracy but only part of the solution. However, what timeframe should be considered long-term? The last recorded hijacking of a commercial ship in the region was in 2017 (The Guardian, 2017). It took another five years for the declassification of the Indian Ocean HRA to happen.

One of the more prominent scholars on maritime security and piracy is Christian Bueger. Bueger 2015, identifies the same root causes for piracy as Duda, Szubrycht, and Potgieter. He argues that piracy thrives in regions with high unemployment rates, especially among the youth, with limited economic opportunities. Bueger’s findings suggest pirates are often driven by economic desperation rather than inherent criminal tendencies. His work emphasizes the role of weak governance and political instability, pointing out that these factors create an environment conducive to piracy. Much of the maritime security and piracy literature focuses on the problem’s origins and whether the PMSC and PCASP would cause more problems than they solved. Various stakeholders developed Best Management Practices (BMP) within the shipping industry. It was the first document that gave ship owners and captains specific advice on the mitigation measure or ‘hardening’ that can be implemented onboard vessels to mitigate the piracy threat (Hansen, 2012).

Understanding the Effects of Indian Ocean HRA Declassification

The introduction of the High-Risk Area (HRA) classification helped enhance maritime security. India introduced the Indian Ocean HRA classification as part of its efforts to improve maritime safety and security within the region. It divides up areas into three categories: high risk, medium risk, and low risk, based on factors such as piracy activity or other threats present in each area. Each category requires different monitoring levels from shipping vessels passing through these waters so they can be better protected against potential dangers. By dividing up areas into distinct categories according to their level of danger, ships could take necessary precautions when travelling through certain parts of the ocean depending on the risks at any given time. Chen et al. (2022, p.1314) argue that automatic identification system (AIS) data supported are crucial in maintaining the ship’s safety. For example, if a ship passes through an area classified as “high-risk,” then it would need more vigilant monitoring than if they were travelling through an area deemed “low-risk” due to fewer potential threats being present at any one time. This helps reduce instances where ships could become vulnerable because they were not aware or prepared for specific types of dangers that might arise while navigating these waters, ultimately enhancing overall maritime security throughout the region. Authors Bereza et al. (2023, p.117597) emphasize prioritizing the management of high risks routes and ports through AIS data. The authors’ data show that ULCVs, compared to smaller vessels, exhibit distinct behaviours that could heighten biofouling risk, albeit in a more limited number of ports. It is imperative for future research to employ Higher Order Network (HON) analysis to investigate other means of dispersal. Such studies are essential for effectively prioritizing the management of routes and ports with a higher biofouling risk.

Many countries have also implemented naval patrols around this area to deter any criminal activities within it. Furthermore, due to its strategic location between Europe and Asia along major trade routes like Suez Canal and Red Sea Shipping Lane, having secure navigation through this zone has become increasingly important for global commerce over recent years (Lee & Wong, 2021, p. 01019). As such, governments across various nations have been investing heavily in improving safety standards here so that commercial vessels can transit safely without fear of attack or hijacking by pirates or terrorist groups operating in this part of the world. Lee and Wong’s (2021, p. 01019) article provides valuable insights into the legal impact, risks, and liabilities associated with the Suez Canal blockage. The study emphasizes the need for proper risk management and preventive measures to minimize the disruptions and financial losses experienced by the global supply chain.

Taking extra security measures when travelling through the Indian Ocean has numerous benefits, including increased safety for crew members aboard vessels passing through this region and improved protection against theft or damage caused by pirates or terrorists who might target them during transit. Additionally, having an armed escort vessel accompanying the ship provides another layer of defence against possible attack scenarios, which could otherwise result in significant financial loss without proper coverage being put into place beforehand. Insurance is always recommended whenever travelling through risky areas because it offers a backup plan ready should anything go wrong during transit. This may comprise medical bills incurred after an injury sustained onboard. Furthermore, depending on where exactly one plans to go within this region, certain policies may provide coverage specifically designed to protect maritime interests. Hence, doing research before making any decisions regarding insurance purchases pays off.

Before its recent declassification, the Indian Ocean HRA was one of the most dangerous areas for maritime operations due to piracy threats from Somalia. This led to increased insurance premiums for vessels travelling through or near it and additional security measures being taken by ships passing through it, such as armed guards onboard (Jesse, 2009). At the time, author Jesse (2009) argued that the joint training between African soldiers and the USA helped to de-escalate the rising maritime insecurity in the HRA. The area also saw reduced traffic due to its high-risk status, which meant fewer opportunities for cargo transport within it. Removing the Indian Ocean HRA classification has positively and negatively affected shipping companies in that region. On the one hand, there are now more opportunities available for cargo transportation since there is no longer any fear associated with entering those waters. However, while these benefits may be great initially, over time, they could lead to complacency among ship operators who might become less vigilant about safety protocols when sailing through formerly classified HRAs – leading to potential accidents or incidents occurring further down the line if proper precautions are not taken regularly enough (Li, 2023, p.103171).

One of HRA declassification’s most significant financial consequences is an increase in insurance premiums. As ships are now required to be classified as either “non-hazardous” or “hazardous” depending on their cargo type, insurers may raise rates accordingly despite decreased risk exposure. Global (2020) report critically examines the security cost associated with declassifying the HRA in the Indian Ocean. According to the report, maritime operations in the Indian Ocean can remain secure and cost-effective through the sustained implementation of BMP, supported by investments in multinational naval coordination and capacity building of littoral states. The report shows that the latest decrease further lessens the load on trade and consumers in northern Indian Ocean nations. This is due to the lower insurance premiums and, as a result, reduced freight expenses. Nevertheless, one could argue that this recent reduction does not completely reflect a precise evaluation of the current maritime risk trends in the Indian Ocean.

Some carriers may also face additional costs associated with retrofitting existing vessels to meet new safety standards set by the International Maritime Organization (IMO). Implementing HRA declassification has led to several changes in operations for shipping companies around the Indian Ocean (“Shipping industry to remove the Indian Ocean High-Risk Area,” 2022). For example, vessel operators must now ensure that all crew members receive appropriate training related to hazardous materials handling before any voyage begins; failure to do so could result in hefty fines or even criminal charges against those responsible. Furthermore, ship owners must keep detailed records regarding each voyage undertaken—including information about what types of goods were transported and where they originated—in order for them to remain compliant with IMO regulations at all times. The global report concludes that Piracy from Somalia has declined globally (2020). The incidents in the broader Indian Ocean cannot be attributed to piracy, and the reason why the HRA may no longer be suitable for its purpose is due to resistance to change from those involved.

Factors and Risk Management Processes Affecting Security Measures

Pirate activity off coasts East Africa Horn Peninsula has led many nations to come together to address the problems collectively since no single country alone can effectively tackle the issue in its entirety. As a part of the global response, United Nations passed Resolution 2010 authorizing the use of force against suspected Somali pirates, while European Union established Operation Atalanta in 2009 to protect merchant ships travelling the Gulf Aden Red Sea from attack (Bueger, 2013, pp.297-316). Such efforts demonstrate how even distant countries like US and Australia are willing to cooperate to ensure the safe passage of goods across oceans despite political differences between them; otherwise, they prevent cooperation elsewhere in foreign policy relations. Bueger (2013, pp.297-316) argues that despite international assistance combating piracy, long-term stability still depends largely upon regional governments working together to create sustainable solutions to prevent future outbreaks of violence within littoral states around the Indian Ocean basin. Therefore, it is essential leaders involved recognize the importance of maintaining peace and prosperity entire region instead focusing interests of individual nation-states solely when making decisions affecting all parties concerned, given the interconnected nature current geopolitical environment in today’s world, where events occurring in faraway places affect the lives of people living close each other regardless distance apart physically geographically speaking.

Vreÿ (2010, pp.121-132) argument corresponds with the author’s Buegar view on Africa taking the issue of maritime security more seriously and with the implementation of new measures. By 2010, there was growing global concern about security in African waters. This concern aligned with Africa’s own explicit efforts to address threats to maritime stability. As a response, the United Nations passed several resolutions to combat piracy and send naval forces to the Horn of Africa (Vreÿ, 2010, pp.121-132). Consequently, Africa’s seas attract a wider array of actors, which introduces security and insecurity to the region. Ensuring good order at sea is now a top priority for African policymakers. In order to secure the Indian Ocean region, several key security measures are employed by governments and other organizations operating within the declassified HRA. To monitor activity on the seas, maritime surveillance systems such as radar or satellite imagery can be used to detect suspicious behaviour or objects. These systems can also provide real-time information about weather conditions affecting navigation safety. In order to track ships’ movements more accurately, vessel tracking systems have been implemented throughout the HRA using Automatic Identification System (AIS) technology.

Li (2023, p.103171) argues that this allows authorities to identify any potentially dangerous vessels quickly so they can take action if necessary. Regular naval patrols conducted by regional navies help deter illegal activities at sea. At the same time, joint exercises between countries increase cooperation amongst them when responding to incidents or emergencies that may arise within their waters. Some countermeasures, such as Private Armed Guards/Vessel Protection Detachments (PVD), are designed specifically for countering piracy operations occurring within this region. Jesse (2009) claims that armed guards onboard merchant vessels provide an additional layer of protection against pirate attacks since pirates often avoid attacking ships with visible weapons onboard due to the increased risk involved with engaging them directly, instead opting for easier targets without PVDs present.

Recommendations for Managing Risks and Business Continuity Issues

In 2019, an international agreement was signed by multiple nations which declared certain parts of the Indian Ocean as “high-risk areas” due to their proximity to various countries and potential for conflict or terrorism activity (“Shipping industry to remove the Indian Ocean High Risk Area,” 2022). As part of this agreement, each nation agreed to implement specific risk management strategies within their borders to reduce any threats from activities occurring within these regions. There are three main types of risk management strategies currently being used in the declassified high-risk area Indian Ocean; physical security measures, intelligence gathering/sharing initiatives, and economic sanctions against those deemed responsible for any illegal activities taking place within these regions. Each strategy works together towards achieving greater safety throughout this region while providing more effective monitoring capabilities than ever seen in such waters.

Current risk management strategies employed around India’s oceans appear to have positive effects regarding reducing the overall danger levels present. Physical security measures involve deploying naval vessels from participating nations into designated zones so they can monitor suspicious activity or enforce laws if necessary. Intelligence-sharing initiatives allow governments access to information about possible terrorist networks operating near coastal areas or other criminal organizations engaging in illicit trade across national boundaries – allowing them time to react appropriately should something arise suddenly without warning signs. Lastly, economic sanctions provide another layer of deterrence against those involved with illegal activities because it limits their ability to operate freely without fear of repercussions from authorities abroad. All three approaches combined create an environment where there is less chance of threat actors succeeding at carrying out attacks successfully, thus making it safer for all nearby people, including citizens and tourists.

Despite a change in status, gaps and challenges are still associated with doing business within the region, which must be addressed if businesses wish to remain competitive. Several gaps and challenges face businesses operating within the newly declassified High-Risk Area (HRA) Indian Ocean region. Author Annette Leijenaar (2012) argues that unless Africa rises and seeks integration with countries in fighting privacy, piracy is likely to continue dominancy in the Indian Ocean. Such cooperation can help address some of the major gaps experienced by some African countries while trying to address the issue. For instance, many areas lack basic infrastructure such as roads or ports, which makes transportation difficult and costly for businesses wishing to operate here. Additionally, communication networks may also be limited, making it hard for companies to stay connected with their customers or suppliers elsewhere.

The HRA designation means that certain activities may not have been monitored closely enough before being downgraded from ‘high risk’ status, thus leaving some areas vulnerable to criminal activity or terrorism threats that could disrupt normal operations without warning (Annette Leijenaar, 2012). Furthermore, piracy remains an issue even though naval forces regularly patrol throughout much of the oceanic zone meaning ships carrying goods need additional protection when travelling through these waters. There is often confusion surrounding regulations governing international trade between countries located along different parts of the coastline leading to delays or complications when attempting cross-border transactions. In addition, local laws related to taxation, and labour rights, among others, may differ significantly from those found elsewhere, further complicating matters.

In order to maintain continuity amidst all these potential obstacles, there are various strategies that businesses should consider implementing. Companies should invest resources to develop better transport links, land-based (roads/railways) and maritime (ports/harbours). This would improve internal and external access across regions towards other markets outside India, allowing them greater flexibility when trading internationally. Roach (2004, pp.41-66) argues that it is important for firms operating within this new environment to improve safety standards to protect themselves against possible attacks while ensuring compliance with relevant laws regarding data privacy. For example, investing in advanced surveillance systems and regular staff training sessions on cyber security best practices would help mitigate the most common risks posed by malicious actors online (Roach, 2004, pp.41-66). In addition, governments should work together towards establishing unified regulatory frameworks covering topics like taxes and labour rights so that companies know what rules apply no matter where they conduct business inside India’s borders reducing complexity during negotiations between parties involved.

In order to ensure that operations remain safe and secure, it is important to understand how best to adapt to these changes. The first step towards adapting successfully is assessing any potential risks associated with operating within this newly declassified area. According to Roach (2004, pp.41-66), when companies are making decisions, they should consider various factors that could impact their operations, such as political instability, natural disasters, piracy, terrorism, or other threats. It is also crucial for companies to evaluate the infrastructure and resources available at their locations so that they can prepare for any additional support needed during emergencies. After identifying potential risks, companies must create strategies to effectively reduce their impact. These strategies may include implementing security protocols at all levels, such as personnel screening, and developing contingency plans, such as evacuation.

Additionally, companies should regularly review existing safety and security policies to be up-to-date with current regulations and standards set by local authorities or international organizations like NATO/EU/UN (Annette Leijenaar, 2012). In addition to having effective strategies in place, staff members must receive training on how best to respond when faced with unexpected events such as terrorist attacks or natural disasters while working offshore in areas deemed “high risk” by governments worldwide. By providing employees with adequate knowledge about what actions they should take under certain circumstances, employers can help reduce stress levels among workers, ultimately leading to better performance. Finally, once all necessary steps have been taken, monitoring progress over time is crucial to ensure everything runs smoothly. Regular reviews allow managers to identify any weak points where further action might be needed to address issues before they become bigger problems.

The EU has already begun taking steps towards addressing some of these issues by providing financial support through its Instrument, contributing to Stability & Peace (IcSP). This funding helps finance projects to strengthen coastal surveillance systems; support capacity-building initiatives amongst law enforcement agencies; promote sustainable fisheries management practices; developing anti-piracy strategies; all to enhance maritime security across various regions, including those located near high-risk areas within the Indian Ocean region. They also provide technical assistance where needed via experts from member states who possess expertise in tackling specific problems related to marine crime prevention efforts. The report “Geopolitics and Maritime Security in the Indian Ocean What Role for the European Union?” (2014) shows that the EU fears the issue spilling into the Pacific Ocean. Therefore, handling it while there is time is the perfect approach while fostering corroboration. Increased collaboration between governments and non-governmental organizations will be necessary if meaningful progress toward improved maritime security across high-risk areas within the Indian Ocean region will succeed (“Geopolitics and Maritime Security in the Indian Ocean What Role for the European Union?“, 2014). Fortunately, however, it appears that much work has already been done by establishing partnerships between different stakeholders involved – most notably through initiatives supported by IcSP funds provided by the EU which should help facilitate further action being taken over time.

Dryad Global (2022) examines the relevance of IMO 2021 cybersecurity compliance to the maritime security industry. To understand how relevant IMO requirements are, it is important to first understand them. The main points include: All ships must be equipped with an approved Information Technology system by January 1, 2022; Companies must develop policies and procedures related to cyber risk management; Ships must also comply with applicable international regulations regarding data protection and privacy; Companies should ensure their IT systems are regularly updated and monitored for any potential threats or vulnerabilities. These new requirements from the IMO are highly relevant for ensuring safety in the maritime sector (Global, 2022). By requiring all ships to be equipped with an approved IT system and having policies and procedures in place relating to cyber risk management, companies can better protect themselves against malicious attacks or breaches that could potentially cause significant financial and reputational damage.

Additionally, complying with international regulations regarding data protection ensures customer information remains secure at all times, which helps build trust between customers and businesses alike (Global, 2022). By adhering closely to these guidelines set out by the IMO, several benefits come along with doing so, including increased efficiency due to less downtime caused by malware infections or other issues associated with poor cybersecurity practices; improved customer satisfaction through enhanced data protection measures; and reduced financial losses resulting from successful hacking attempts. Therefore, companies operating within this sector must adhere strictly if they wish to remain competitive while always protecting their assets.

Maritime business operations require a careful balance between security requirements and operational efficiency. In addition to meeting security requirements, it is important to consider how to increase operational efficiency within the maritime business. This could include streamlining processes through automation solutions that improve productivity and reduce manual labour or paperwork costs. Additionally, improving communication among stakeholders can help optimize operations by providing better customer service while reducing time spent dealing with inquiries or complaints from clients/customers about their experiences onboard vessels operated by the company’s fleet of ships (Roach, 2004, pp.41-66). When both security requirements and operational efficiency are balanced correctly within a maritime organization, numerous benefits can result from this approach, including improved customer satisfaction levels due to increased trustworthiness, reduced risk exposure thanks to enhanced protection against potential threats, cost savings resulting from more efficient use of resources; greater employee engagement leading towards higher morale amongst staff members; plus an overall boost in organizational performance due to streamlined processes enabled by advancements made possible when implementing digital tools into daily workflows aboard vessels owned/operated by the firm’s shipping division(s).

Business owners must understand all relevant international standards, guidelines, and piracy prevention regulations before setting sail on any voyage or mission. They should also familiarize themselves with best practices recommended by organizations like the International Maritime Organization (IMO) (Bueger, 2013, pp.297-316). Companies must develop policies and procedures that outline specific measures they will take to prevent pirate attacks from occurring during their voyages or missions at sea. Such policies may include establishing communication protocols between crew members, implementing security systems onboard ships, and training crews on emergency response plans. To further reduce the risk of pirates attacking their vessels, companies should implement various security measures onboard ships, including installing surveillance cameras; using anti-piracy technology such as radar systems; hiring armed guards/security teams if necessary (The Editorial Team, 2023). By taking proactive steps towards ensuring compliance with international standards and guidelines for preventing pirate risks, businesses operating within the maritime industry stand to gain many benefits, including but not limited to increased safety levels amongst crew members while out at sea, improved reputation among customers due to reduced likelihood of experiencing an attack from pirates; and lower insurance premiums since insurers view compliant firms more favourably than those who do not follow proper protocol.


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