Business Risk Measurement and Management in the Cargo-Carrying Sectors of the Shipping Industry

Shipowners are faced with substantial business risks in the international environment that they operate. Risks emanate from fluctuations in freight rates, bunker prices, the price of the investment assets (i.e. the vessels), interest rates, exchange rates and so on. This chapter puts forward a framework for identifying and measuring these risks and proposes solutions on how to handle the question of risk management. In the process, a review of the fundamental literature in the area of shipping business risk management is provided in detail, along with more recent developments in explaining and business practices in managing risks in the shipping industry. Naturally, a lot of the details underlying the research have not been reproduced here due to lack of space. However, these details can be found in the original papers referenced throughout the chapter.