Business Environment-Based Risk Model for the Container Liner Shipping Industry

Abstract

Container liner shipping is a risky industry. There are many unexpected risks and uncertainties in extended journey around the world which can be the result of external events such as political actions, economic situation and natural disasters. The impact of these external risks can be devastating. In this paper, a new business environment-based risk (BEBR) model for prioritising and assessing the external risk criteria in the CLSI, is developed. The term BEBR can be defined as a wider scope of external risks including political risks, economic risks, social risks and natural hazards that directly or indirectly influence the business performances in the CLSI. An analytic hierarchy process (AHP) approach is employed to prioritise the importance of risk criteria and is adapted into a deterministic weight factor in the context of risk impact level. So far, no study has been found that developed this model for the CLSI which highlights a significant research gap to be fulfilled. Based on the test case, the result has shown that economic risks are the most significant main criteria in the BEBR model, followed by political risks, natural hazards and social risks. For future research, this paper recommends a quantitative risk analysis for assessing the targeted or whole risk criteria in the BEBR model.

Keywords: business environment-based risk (BEBR), container liner shipping industry (CLSI), analytic hierarchy process (AHP), prioritisation.