Guest Feature: Trusted Advisor - Who Do They Really Work For?
There are few positions as important as that of the trusted advisor. Whether it is as entrenched within an organization’s leadership as a consigliere or simply a trustworthy employee that can be counted upon to give impartial, credible advice with the best interests of the company in mind - the person can become invaluable. Those positions and people, however, are identified after long periods of association - a testament to the statement that trust is a commodity that is earned, not sold.
The challenge today is that trust and credibility are now becoming a commodity for sale and not something that is earned over time. Whether this comes in the form of certifications, memberships or even basic statements of compliance, the challenge here is that even the former pinnacles we have come to trust in have, over the recent five years, shown that business leaders have perhaps trusted too much in those institutions or organization’s motives and impartiality.
First, let us deal with the issue of certification. Certification is nothing more than a body turning around and stating that it is willing to stand behind someone or something. In some cases that certification is based upon testing, referrals and observation of work combined with commitments made by the individual to adhere to certain principles - such as one might find in the medical, engineering, or legal professions. In other cases, the certification may simply be based upon the statements of a few members of the association that they believe that the person or organization being certified is “good to go.”
In the coming years, the maritime industry will literally be inundated with various bodies offering some form of certification or another. Why? Because the industry has determined through its contracting processes that it considers certification to be a trustworthy way of measuring competence. At that point, the great lie enters into the picture.
The first great lie is that associations work solely for the betterment of industry. That is marketing. An Association works towards the betterment of its membership along certain lines. Consider the recent Guardcon contract - currently one of the sacred cows in the industry. Were the insurance levels and licensing / permit requirements set in such a way that they followed the normal practices associated with risk management? Not entirely. A copy of the explanatory notes indicates that the drafters aimed to raise the bar in terms of the standards to which security companies must reach in terms of insurance cover for their risks and permits and licenses to allow them to lawfully transport and carry weapons. The insurance requirements alone are set at such a level as will potentially exclude smaller companies from being able to offer their services using GUARDCON if they lack the necessary financial resources. This is deliberate and is intended, along with the permits and licenses provisions, to weed out operators who may potentially place shipowners and their crews at risk.” (Explanatory notes, paragraph 3).
What does this mean to the Executive? It means that part of a standardized contract currently being put in place as a “requirement” was actually conceived with the intent of manipulating the market. I will let others decide the appropriateness of such actions but one will certainly understand the statement that when one restricts the market to only large, well-established corporations and essentially restrict the ability for new blood to enter into the market. This, in turn, leads to conditions where the market itself is far more vulnerable to being “told what to pay” versus the normal competitive playing field where a variety of companies offer their services across a range of rates and the client determines which will be most suitable.
It was perhaps noteworthy that the association that established Guardcon soon after announced that those member companies would be required to use the Guardcon contracts and would also then be strongly encouraged to join BIMCO under their Associate Membership for Maritime Security Companies - at a cost of some 2500 Euros (entrance fee) and 5000 Euros (Associate Members).
The next round of messaging that has come forward is that there is an upcoming International Organization for Standardization (ISO) standard being considered by the International Maritime Organization (IMO). What has changed in that messaging is that when it was first announced,, BIMCO and ISO were linked very clearly in their messaging. If one were to look closely at the ISO 28007 standard when it was first produced, one would have been hard pressed to see where GUARDCON stopped and the ISO standard began. Today however one does not hear about the IMO looking to adopt the BIMCO – ISO standard but rather just the ISO standard. Where did BIMCO go ?
Today, however, the industry warrants an explanation from the International Organization for Standardization that its early development processes were indeed kept pure. Otherwise it runs a risk of having hard-won credibility eroded by seizing upon an opportunistic moment. So I would invite ISO to clear the air, not through management statement, but through clearly auditable demonstration of facts and records, that the ISO standard development remained free and clear of the promotion of a certain industry point of view - particularly where there were other dissenting views from industry that were clearly communicated.
What we are likely to see as this approach moves forward is a significant inflationary pressure placed on maritime security companies. The costs of these memberships is passed on to the client…meaning that maritime security companies will soon be passing on over $10, 000 USD per year in basic costs of membership (not counting the operating costs incurred in maintaining “compliance” with these new regimes which will themselves be in the tens of thousands) to shipping companies.
There are also operational impacts on the shipping companies that will likely arise in the next few months. As “Associations” look to “certifying” members, many have committed that inspections will happen at the shipside or, in some cases, even on board vessels. One might hope that the shipping companies were consulted before these claims were made, but these often fail to mention how the presence of additional inspectors / auditors would be coordinated with respect to such fine details as minimum manning levels and what occurs should a security team in transit fails in its audit. Given that kind of information, would the shipping company suddenly be exposed to new liability or additional liability with respect to its coverage (particularly in cases where a previously “certified” company was found not to meet all the criteria)? Or would the shipping company be required, in order to meet its own insurer’s requirements, to enter into a new contract with a “certified” company? This, frankly, is a layer of complexity that the shipping industry does not need.
At the root of this issue is what happens when a vacuum in leadership is allowed to persist on the international stage. Private entities will smell the opportunity to create niche markets and will work hard to establish a stable niche market. What has become clear is that the lack of strong leadership on the part of flag states, many of which have clearly demonstrated the concept of paralysis through analysis, and the IMO which has, despite it being common knowledge, failed to address several of the issues pervasive in the industry - ranging from training standards (and I don’t mean the latest iteration of the UK training standards) to the presence of certain floating armouries which operate well within the grey zones - but those are matters for other discussions.
To the executive within the shipping industry, perhaps the best counsel is to ensure that the various contracting organizations are not being unduly influenced by those with vested interests. It is perhaps time to remind some that they work for the shipping company and are required to provide the best possible service (not necessarily the most expedient service) to their own organizations. Otherwise, what we may well find is yet another layer of compliance-based auditors adding complexity onto an already complicated system of regulatory requirements - not for the betterment of the industry but because it locks in certain markets and income generating streams at the expense of the shipping companies and their own clients.
Written by executive officers of the IAMSP – Past & Present.
David Stone, President, International Association of Maritime Security Professionals
The Maritime Executive does not necessarily endorse any opinions herein.