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Risks uncovered or passively retained:

Tebma Shipyards has covered almost all operational risks, major hazard
risks and most of the risks concerning safety of their employees. However,
risk assessment and analysis has been done on only the core activities of
the Shipyard.
They have not covered all transaction based activities and other
supporting activities. For example: purchasing, risks regarding purchasing
material from various vendors/suppliers is not at all covered! The reason
mentioned to us by the shipyard manager was that they have multiple
vendors, if one does not supply them required material, there are others
who will supply. Also on commercial side, while selling ships to clients,
potential risks like product liability claims are not at all covered. Thus, the
company is prone to high liabilities where supporting activities are
concerned. They feel that as compared to core production of vessels
(ships), these activities are secondary in nature.
Other risks uncovered:
Attrition risk: Due to high dangers and accidents, attrition risk at
Tebma Shipyards is very high. Industry standard is approx. 30% and
Tebma has attrition rate at around 35%. The company has not
covered this risk because they predominantly higher people from
small towns and offer them high hourly salary.

In the background, the Tebma ship building station, the height of the station makes it
a very risky place to work. Ship building involves 3Ds: Danger, Dirty & Difficult

Trade risk: Leakage of critical data to competitors. It has happened


in the past that new ship plans have been leaked to competitors of
the company. This has resulted in loss of a client to competition.
This risk is uncovered as chances of occurring of such type of risk is
very rare (1%).

Hazard risk: Accidents causing damage to property or health of


employees is covered but accidents causing death of employees is
not covered. There was one incident where a rod fell from the ship
and killed an employee. The company just gave a monetary
compensation of 5 lakh rupees.

The prime reason for death of employees at Tebma is working at night in closed spaces

Hazard risk: Risk due to exposure to asbestos is still not uncovered.


Despite asbestos not in use anymore, the shipyard manager agreed
that employees still get affected due to it.

Old ships containing asbestos still affect employees

Risks of specific hazards such as high pressure washing and paint


spraying are uncovered. Though safety guidelines have been
defined by the company but the management does not regard the
damage due to such incidents as potential risks.

Damage to employees health during tasks like paint spraying & high pressure
washing

Risks due to thefts are uncovered. The loss of key materials and
equipment in a shipbuilding project can cause serious delays. If
special tools are needed to complete a job, the impact of their nonavailability can extend far beyond the actual job itself. The reason of
not assessing such risks is that their occurrence is very low (less
than 1%).
Nov 2011 news: theft at Maple shipyard of equipment worth Rs. 25000

Cyber risks are uncovered at Malpe office (though they are covered
at Chennai office). Currently, every new ship built has software to
run its engines, which is almost always updated remotely. Complex
cargo systems are also managed digitally. Even cranes run on
satellite-based GPS systems. Information technology is also used
extensively in maritime navigation systems. And risks due to various
cyber threats like hacking, data stealing have not been covered.

Furgo Scout- ship built by Tebma is a smart ship with automated systems and is
prone to cyber risks

Safety of sub-contractors: risks concerning management of


subcontractors are not covered. Sub-contractors often use their own
equipment and safety gear. These are often found not to be in the
best condition and not to have the standard required by the yards
own safety standards.

Subcontractors safety is not the concern of management: they get their own gear
Apart from the above risks mentioned, company has passively retained
financial risks. The shipyard manager confirmed that Tebma is susceptible
to inflation risk, exchange rate risk and interest rate risk. Tebma has many
international clients and gets affected by the rise in oil prices as well.
According to the manager, financial risks are taken care as when they
happen and they are taken care by CFO at HQ in Chennai. In Malpe, their
major concern is on operational risks and main hazard risks. And one point

to note is that the company is running under losses, according to HR


manager at Tebma.