An Economic Approach to Maritime Risk Management and Safety Regulation

Kevin X Li and Kevin Cullinane ()
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Kevin X Li: Department of Shipping & Transport Logistics, the Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
Kevin Cullinane: School of Marine Science & Technology, University of Newcastle, UK.

Maritime Economics & Logistics, 2003, vol. 5, issue 3, 268-284

Abstract: Following a description of the fundamental concepts and terms applicable in maritime risk management (MRM), the various methods by which shipowners might reduce their maritime liability risk are analysed. The advantages and disadvantages of each of the methods are addressed and examples of their potential use are provided. Based upon the premise of rational decision-making, an economic explanation for MRM is deduced from first principles and a distinction is drawn between the choice context of individual shipowners and that of maritime regulatory authorities. By integrating these two contexts, a conceptual approach to the application of cost–benefit analysis in maritime safety regulation is derived. The paper concludes by advocating the adoption of such an approach as a means of ensuring that safety regulation sets optimum targets such that the level of compliance yields maximum economic benefit and that the MRM which shipowners implement is effective in satisfying the regulatory targets that are set. Maritime Economics & Logistics (2003) 5, 268–284. doi:10.1057/palgrave.mel.9100078

Date: 2003
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