Seven deadly sins of joint ventures under competition law
Joint ventures in the energy and resources sectors.
Interim guidelines for addressing cyber related risks in the shipping industry have been approved by the International Maritime Organisation (IMO). Published as Circular MSC.1/Cir.1526, the interim guidelines are aimed at addressing current and emerging cyber risks in the maritime industry. Approved in June 2016, the guidelines will be discussed further at the Maritime Safety Committee in November 2016.
A maritime cyber risk refers to the degree to which a “potential technology asset” can be threatened or interfered with, which could lead to shipping-related operations, security or safety systems failing as a consequence of the information or systems being corrupted, lost or compromised.
The guidelines have been developed in response to the massive rise in systems and equipment that can be accessed via the internet, Bluetooth or other open networks. The so-called “internet of things”, which allows devices to communicate with each other using embedded sensors that are linked through wired and wireless networks and can be controlled in real time, is a powerful tool for maintenance management and safety but has created a door through which any person can access those systems. The guidelines list a number of vulnerable systems which include bridge systems, cargo handling and management systems, propulsion and machinery management and power control systems, and communication systems, to name a few.
Though ten years ago it may have seemed far-fetched, one can easily imagine any number of scenarios in the near future where terrorist organisations seize navigational control of a ship, endangering crew and passengers, threatening large-scale environmental harm, and risking damage to cargo. With wreck removal operations becoming increasingly complex and costly, the economic harm of a cyber-crime initiated incident could be considerable.
A leading P& I Club has commented that “viewing cyber security as simply an Information Technology (IT) issue is parallel to considering safe operation of a vessel as simply a main engine issue. Addressing cyber security should start with the senior management level of a company rather than being delegated to the Vessel Security Officer or the head of the IT department.”
The primary aim of the guidelines is to encourage all organisations operating in the shipping industry to apply the same vigilance to safety and security management practices in the cyber domain as for physical risks.
Under the guidelines, ship owners and operators are required to identify, manage and avoid cyber risks. The guidelines define cyber risk management as being “the process of identifying, analysing, assessing and communicating a cyber-related risk and accepting, avoiding, transferring, or mitigating (that risk) to an acceptable level (after) considering the costs and benefits of actions taken to stakeholders”.
Cyber risk management should be considered a part of operational risks and evolve “as a natural extension of existing safety and security management practices”.
The maritime industry already has instruments which could be used to implement and develop proper cyber risk management.
The International Ship Management Code (the ISM Code) sets out maritime safety management standards for ship owners and operators, the objective of which is to ensure safety at sea and prevent the loss of life or damage to the environment by way of a safety management regime. The International Ship and Port Facility Security (ISPS) Code, a risk management system to enhance port and ship security, focuses on physical security and does not cover cyber risk management. It must be a matter of urgency for the IMO now to turn their attention to update the ISPS Code to deal with this risk.
With the advent of modern day cyber security risks, which can have a direct impact on ship navigation and cargo handling operations, there can be no doubt that the safety management systems envisaged by the ISM and ISPS Codes must incorporate proper cyber risk management.
The Baltic and International Maritime Council (BIMCO) has developed The Guidelines in Cyber Security on-board Ships (February 2016) which all ship owners and ship operators should consider.
The shipowner’s duty to provide a seaworthy ship is well-known. In terms of Article 3(1) of the Hague-Visby Rules the carrier must, before and at the beginning of the voyage, exercise due diligence to make the ship seaworthy to properly man, equip and supply the ship, and to make the ship cargo worthy.
A shipowner’s risk management system should now include some level of cyber risk management. Such efforts need not be too sophisticated but some steps to harden the IT systems ashore and afloat would probably be expected now, given the increasing risk posed to IT in all walks of life, including increasingly, shipping. A complete failure to do so could possibly be a breach of the carrier’s obligation to exercise due diligence to make the ship seaworthy and cargoworthy. If, for example, the bridge system, or cargo handling systems were corrupted, lost or compromised due to a cyber risk materialising, and this failure lead to cargo being damaged, the cargo interest would be in a position to argue that the ship was not cargoworthy in terms of the Hague-Visby Rules as measured against modern requirements. This is one of the many aspects which need to be considered in today’s commercial environment where cyber risk management is now a reality for the shipping industry. In addition to the catastrophic consequences suggested above, there are potential liability risks arising from the loss of customers’ data. There are also regulatory risks which may result from data breaches leading to regulators imposing fines or sanctions, and the reputational damage associated with a cyber attack.
Shipping organisations must appreciate that cyber risk management extends beyond what is dealt with in the new IMO guidelines. There is a wealth of guidance provided to the industry and many experts whose services can be engaged to assist with the technicalities. It is essential that a shipping organisation gets proper advice on policies and procedures, systems, controls and frameworks for data protection and installs systems in order to prevent cyber incidents and to develop risk avoidance strategies. This is not to say, as some suggest, that this is the greatest threat facing shipowners right now. The current economic climate is a much bigger threat and there are no current examples in shipping of a party trying to take control of systems through cyber-crime or hacking – the most serious IT incidents have been caused by the inadvertent introduction of a cyber virus by ill-trained crew. However, equally, it is no longer acceptable for operators to sit on their hands and ignore this new threat to their operations. The threat is growing and all stakeholders will increasingly require, often through contractual clauses, their counterparts to take reasonable steps to negotiate this risk through sensible risk management.
Joint ventures in the energy and resources sectors.