There were over 400 senior Chinese leaders present and the basis of my speech was to urge them to think about two key concepts: firstly that clean seas are good for business; and secondly that marine environment protection is an essential strategy for corporate risk management.

Times are hard globally at the moment with countless economic pressures, rising insurance costs, and growing regulatory pressure, however no shipowner, or charterer, should neglect its risk management procedures. One lesson of the Erika, Prestige, Cosco Busan and other recent oil spills is that the cost, to owners, operators and charterers, of damage to the marine environment is by no means proportionate to the amount of oil spilled.

What’s more so-called ‘strict liability’ rules, regarding damages, mean that even if a ship’s owner or operator is not directly at fault, the facts—political and legal—are that a ship operator’s liability for environment harm will most likely be considerable, virtually unlimited, and, in the U.S., ‘strict’– that is, liability regardless of actual fault. A lesson we should all take careful note of.

The shipowning community needs to take responsibility for minimizing human error both on board ships and ashore and as such should work towards environmental excellence and promotion of safety at all times.  I told the forum I believe that this can be achieved by following these important suggestions:

1. hiring quality personnel;

2. training in accordance with a formal teaching system;

3. the identification of problems;

4. rewarding environmental excellence and safety performance;

5. communication;

6. empowerment;

7. responsibility;

8. respect;

9. integrity; and

10. emphasizing the need for willingness to change bad habits, and correct mistakes.

Another suggestion offered to the audience was to avoid “beancounter-ism” at all costs.  I stressed how important it was for them to be able to assess the adequacy of their safety and environmental budgets…and broke the news that this means spending money now, in order to save more later.  Ensuring your financial staff are on board with this and also subscribe to specific quality, safety and environmental goals will help you to achieve these aims. Budgets need to be everyone’s business and shortfalls must be resolved BEFORE an oil spill or other disaster occurs.

The Senior Maritime Forum was sponsored by the Ministry of Industry and Information Technology and the Ministry of Transport of the People’s Republic of China, along with the Shanghai Municipal People’s Government.  The Forum included environmental, shipbuilding, ship finance and offshore sessions. It was held in tandem with Marintec China 2011, which attracted over 60,000 visitors to an exhibition which is one of the largest maritime events in the world.

A lot has happened since last February.  In my remarks at that time, I called for a partnership between industry, local and national governments, environmental organizations and concerned individuals, acting together as preventers and responders.  I also commented on the importance of the period of investigation and remediation, after an environmental incident.

Recently, a well-known corporate chief executive announced that “the sole criterion for performance reward…in the fourth quarter of 2010 will be performance in safety, silent running and operational risk management – and exhibiting and reinforcing the right behaviours consistent with these goals.”

He added that fourth quarter performance would be measured “solely according to each business’ progress in reducing operational risks and achieving excellent safety and compliance standards.  Mr. Dudley concluded with the observation that “we are taking this step in order to be absolutely clear that safety, compliance and operational risk management is BP’s number one priority, well ahead of all other priorities.”

The essayist Malcolm Gladwell wrote, in a 1996 New Yorker essay “human beings have a seemingly fundamental tendency to compensate for lower risks in one area by taking greater risks in another.”  He noted that “we have constructed a world in which the potential for high-tech catastrophe is embedded in the fabric of day-to-day life.”

A great mathematician who died earlier in October, Benoit Mandelbrot, made himself very unpopular for challenging the prevailing idea that markets followed the assumption, current in the late 20^th century, of “efficiency”, in that trends could be predicted if one simply took into account known information, and that they would generally follow a “law of averages”.

This implied that risk itself would follow, in general the “bell curve” distribution often found in the natural world.  Dr. Mandelbrot claimed that this was untrue, and that risk management was imprecise and that what he called “extreme outliers” were far more common than the “coin toss” or “bell curve” model, taught, for example, in our business schools, would predict.  We have recently had a number of illustrations of this principle.

One such example is what happened to Massey Energy Co, the nation’s six-largest coal miner, this past year.  Last April, an explosion at one of Massey’s mines in West Virginia killed 29 miners.  It was the worst U.S. coal mining accident in 40 years.  On September 29, the Federal Mine Safety and Health Administration carried out a surprise inspection that found that workers were not taking steps to prevent explosions.  The agency criticized Massey for “ignoring basic mining laws”.

When former Vice Commandant James Card submitted his report, “The Coast Guard Marine Safety Analysis: An Independent Assessment and Suggestions for Improvement”, one of its most significant points was the promotion of more industry-government cooperation, coordination and outreach.

In my presentation last February, I observed that:

“Through organizations like the American Petroleum Institute (API), and more recently NAMEPA, the somewhat insular world of our technical bodies and entities, including classification societies, is being increasingly integrated in the entire concept of marine environmental protection.

Plans such as the National Response Framework (NRF) embody a comprehensive management plan covering emergency preparedness, disaster management and remediation and restoration of our marine and riverine environments, as part of a single approach.  A simple way of putting this is that all of the resources that can be brought to bear when an incident occurs must be known, must be available, and must be put to use if necessary.  Hence the need for partnership”.

We must reaffirm that there is no substitute for drills.  I am speaking not of drilling equipment, or drilling rigs, but of exercises aimed at developing preparedness and teamwork before the incident occurs.

Much of what we are doing, and planning, should be credited to the establishment of new systems of national security preparation after September 11, 2001.  The importance of the U.S. Coast Guard, and its new organizational framework, has required that not only the U.S. Coast Guard and NOAA, but also its private sector partners, establish and evaluate their objectives and goals, based upon field exercises and test results.  This requires tracking and analysis of real-world as well as hypothetical events, and the participation of government and private entities in planning for the future.

One such not-so-hypothetical event might be a major hurricane on the North East coast of the United States.  No such great storm has appeared in many years.  Preparedness goes beyond the saving of life, which is of course the first priority; as we learned from Katrina / Rita, and later Hugo, major storms have major and lasting environmental effects.

NAMEPA, which includes classification societies within its membership is therefore looking ahead to cooperation across a broad span of agencies, companies and individuals, in contributing its own growing fund of experience and talent to evaluating and preparing for future events.  Not all of these are within our control.

Not since the EXXON VALDEZ incident, more than two decades ago, has so much attention been focussed on “measures taken” and “lessons learned.”

There will, we can be sure, be many lessons learned.. One is that the marine environment and its protection is of great political and economic significance.

When a few friends and I formed the North American Marine Environment Protection Association (NAMEPA), three years ago, it was with an awareness that the private sector, the government, engineers and scientists still had to reckon with the peculiar nature of oil spills, particularly those involving large quantities of the stuff.

What we have before us in the Gulf of Mexico is the greatest field test of our abatement and response systems, that has ever been.

Tragically, eleven lives have been lost, and an untold amount of damage already done. I can’t help the feeling, however, that we are now, after a gap of 20 years, face to face with the “beast” — the overriding issue of how to make the system work better.

There is plenty of room for second thoughts, starting with the need for our Congress to adequately fund the said system.

Budget changes should be an early, and welcome, casualty of the unfolding tragedy in the Gulf of Mexico.

One such field of endeavor is the growing local and national awareness, in the United States and Canada of what may be called “old wrecks.”

The Wreck Oil Removal Program (WORP) is a Coast Guard / NOAA – private sector effort to measure, assess and where necessary remediate pollution from existing coastal and inland waterway wrecks, some of which have been “out there” for many years.  These problem wrecks are not necessarily susceptible to the same types of salvage operations that can be undertaken on a ship or barge that went down quite recently.

NAMEPA as an organization fulfils the need for a private sector entity that, in effect, conveys the message that remediation and prevention projects promoted by the private sector are precisely those that are intended to safeguard the marine environment in four major ways:

· merchant marine industry research, training and response;

· port safety and terminal industry environmental protection and response;

· marine environment protection industry programs and response; and

· government and local authority response and training

The role of classification societies is critical in all of these relationships.  Anyone who has attended a conference on tanker safety will be aware of the emergency planning and management tasks routinely performed by members of the oil and natural gas industries.

As the U.S. and Canadian Coast Guard budgets are subjected to growing deficit reduction pressures, working relationships with key industry representatives, such as the members of the classification societies represented here today, the maritime academic community, the environmental community and other stakeholders become more vital than ever.  In effect, the Coast Guard and other government agencies must be given more bang for the buck, without passing the bill along to the taxpayer.

When retired VADM James Card wrote his now-famous report, “The Coast Guard Marine Safety Analysis: An Independent Assessment and Suggestions for Improvement”, one of its most significant points was the promotion of more industry-government cooperation, coordination and outreach.

Through organizations like the American Petroleum Institute (API), and more recently NAMEPA, the somewhat insular world of our technical bodies and entities, including classification societies, is being increasingly integrated in the entire concept of marine environmental protection.  Plans such as the National Response Framework (NRF) embody a comprehensive management plan covering emergency preparedness, disaster management and remediation and restoration of our marine and riverine environments, as part of a single approach.

A simple way of putting this is that all of the resources that can be brought to bear when an incident occurs must be known, must be available, and must be put to use if necessary.  Hence the need for partnership.

Finally, there is no substitute for drills.  I am speaking not of drilling equipment, or drilling rigs, but of exercises aimed at developing preparedness and teamwork before the incident occurs.  Much of what we are doing, and planning, should be credited to the establishment of new systems of national security preparation after September 11, 2001.

The importance of the U.S. Coast Guard, and its new organizational framework, has required that not only the U.S. Coast Guard and NOAA, but also its private sector partners, establish and evaluate their objectives and goals, based upon field exercises and test results.  This requires tracking and analysis of real-world as well as hypothetical events, and the participation of government and private entities in planning for the future.

One such not-so-hypothetical event might be a major hurricane on the North East coast of the United States.  No such great storm has appeared in many years.  Preparedness goes beyond the saving of life, which is of course the first priority; as we learned from Katrina / Rita, and later Hugo, major storms have major and lasting environmental effects.

NAMEPA, which includes classification societies within its membership is therefore looking ahead to cooperation across a broad span of agencies, companies and individuals, in contributing its own growing fund of experience and talent to evaluating and preparing for future events.  Not all of these are within our control.

This is understood to be the merchant seafarers who are, as is well known, often in short supply these days. There is, however, another “human dimension,” one that we often forget.

I refer to the public as a whole. Our industry, absorbed in communicating with itself, has never gotten the hang of establishing rapport with the people we serve – the hundreds of millions of members of the human race who depend, whether they know it or not, on the maritime supply chain to receive the necessaries of life. And so, we bewail (a) our supposed obscurity, and (b) our bad public image.

Some of us believe that this need not be so. Every so often, a beam of sunlight illuminates our inward-looking world, and gives a hint of how we could break down the wall of stuffiness that surrounds us.

One of us who understood this was the Greek ship-owner George Livanos, who, in the 1980s, founded the Hellenic Marine Environment Protection Association (HELMEPA), an early green initiative that was spurred by (imagine!) the Greek shipping industry. Today, HELMEPA is a standard-bearer for everything from beach cleanups to children’s poster contests, all themed on the marine environment. Mr. Livanos understood what public relations professionals call the people-to-people contest.

A dramatic example happened during World Maritime Day observations last month. NAMEPA, the North American Marine Environment Protection Association, of which I’m chairman, sponsored a poster contest. The winner, Kevin Lopez of Levittown, New York, USA, aged 11, gave a fine speech, and, as they say, brought down the house. Several members of the audience cried. It was a remarkable moment, shared with Kevin’s teacher and parents. It was nice, to put it mildly, to share our environmental concerns with members of the public. Imagine.