‘Communism is an economic ideology that advocates for a classless society in which all property and wealth are communally-owned, instead of by individuals’

“You’ll own nothing and you’ll be happy’ Klaus Schwab, President of WEF

Well, now I got your attention let’s delve into risk taking and its link with Capitalism. In a democratic, capitalistic society, the world is characterized by economic change, plethora of information, imperfect knowledge, business uncertainty and opportunities for profit. Can you imagine living in a world of stationary economy, where you knew what to expect, your future perfectly predicted and pre-determined, owning nothing and, all your basic, survival needs, were provided for free by your government, for everyone the same? There would be no uncertainty, no risk, and no profit.

Living in a society where there wouldn’t be challenges, competition, risks and opportunities for betterment, to win or lose, there wouldn’t be any game, for having a game there must be players, rules and, a prize. Prize is key to motivate rival players to take risk for injuries, entering a game – What is life if it’s not a game? Life is filled with uncertainty, risks, competition, rival players fighting for survival, for personal gain and the benefit of their own people – In a capitalistic environment, there are so many unpredictable variables that make the game of business and life itself interesting, challenging and full of opportunities for growth and profit, although, not without taking risks. In capitalistic societies there is a minimal or very low governmental intervention in free enterprise and no matter how big, or small a business is, failure and bankruptcies occur, like the failure of Enron Corporation in 2001, or the catastrophic collapse of Lehman Brothers in 2008, after its 158 years in existence.

When there is intense and high government intervention, particularly for saving big private owned companies from failure and bankruptcy, with subsidies and, or state loans, at the expense of the people, risk factor is eliminated and capitalism is aberrated, because Capitalism is the epitome of risk taking. Risk is an action or activity that has the potential to go wrong, with damaging results. Shipping business is a high risk activity and very demanding in capital outlay.

A shipping company’s mobile assets (income producing vessels) are constantly exposed at perils of the seas, to international competition, to the global economic and trade changes, to local trade disruptions, demand and supply changes, geopolitical changes, local economic changes, international regulation changes, port conditions, quarantines, sanctions, war, piracy etc. For all the aforesaid risks and uncertainties shipping business is highly rewarding. Risk and Reward is highly interlinked. Higher the risk, higher the reward. Otherwise, why to take a risk? Risk is not necessarily bad, risk, in certain cases, can be viewed as an opportunity for profit and maximizing a business’ ROI.

When the type of risk or its assumed percentage, is correctly assessed, measured, it can be affordable and controlled, just in case things deviate from planned objectives. Most recent events in the ever-changing world have brought the subject of risk into higher profile. Evaluating the range of available risk management techniques and choosing the most appropriate response in each case is an increasingly significant element of managerial responsibility in today’s complex business environment.

Risk management maximizes positive risk while minimizing negative risk. Risk management ensures that a shipping company takes as much risk as it can bear. Risk managers identify Risks and Opportunities, develop Risk Prevention Plans for their clientele, assess and measure risks, define with accuracy acceptable risks and organise risk mitigation plans. Knowledge and experience is what is required to efficiently and sufficiently manage risks for securing a business’ success and growth into the future. Nowadays, outsourcing risk management to expert companies with long history in managing risks, is considered by many as a wise risk control decision.

By Mr Anastasios Maraslis,

President/Director of Marasco Marine Ltd