Risk Management Strategies and Schemes for CML - SHA0712

This report analyzes risk management strategies and schemes for Channel Maldives Limited (CML), a state-owned transportation company. The report begins by defining risk management and its procedures, including data collection, risk assessment, and response to illicit activities. It then discusses Islamic insurance (Takaful), its history, principles, and the Shari'ah contracts involved. The core of the report presents strategies and schemes to mitigate risks faced by CML, such as fleet integrity, driver safety, and supply chain disruptions. It emphasizes the importance of risk analysis, government oversight, and technological tools like heat maps for risk communication. The report also addresses climate change impacts, infrastructure deterioration, and the cyber exposure gap. The conclusion highlights how effective risk management can improve CML's operations, build public trust, minimize crises, and promote proactive management schemes. The report also references key sources, offering a comprehensive approach to risk management in the transportation sector.

Running head: RISK MANAGEMENT STRATEGIES AND SCHEMES
Risk Management Strategies and Scheme
Name of the Student:
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Author’s Note:

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RISK MANAGEMENT STRATEGIES AND SCHEMES
Table of Contents
INTRODUCTION...........................................................................................................................2
DISCUSSION..................................................................................................................................2
Risk Management........................................................................................................................2
Islamic Insurance.........................................................................................................................3
Strategies and Schemes................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCE LIST.........................................................................................................................6

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INTRODUCTION
The Channel Maldives Limited (CML) is a transportation company which is owned by
the state and is operational since the last four years only (Aven & Zio, 2014). A preliminary
audit that was conducted revealed that CML had to pay a hefty sum of amounts to compensate
for the lost lives, fire and accidental cases, and embezzlement of funds that were allocated for the
projects in that short history. Moreover, the company now plans to develop a second master plan
for the next five years. In addition to this, to be able to generate a rational return from its
operations, the Board of Directors are trying to emphasise on the ways which will help them
minimise the losses that they have faced in the past due to the various calamities (Aven & Zio,
2014). The paper will aim to discuss and present some risk management schemes as well as
strategies to identify and reduce the potential risks.
DISCUSSION
Risk Management
There exists no particular definition of risk. Although Risk Management is a systematic
approach that helps in determining which passengers and goods need to be examined in specifics
when they enter a new region (Aven, 2012). Risk Management involves the following
procedures – collecting, storing and evaluating the data to understand the risk profile of the items
that are in transit; making use of these risk profiles to assess the likelihood of illegal trade
activities; addressing the risks that have been evaluated by inspecting the items and eventually
responding to the illicit activities (Aven, 2012). It facilitates trade while protecting the
communities against illicit activities (Liu, Saat & Barkan, 2013). Risk can be classified into
objective risk, and subjective risk where objective risk is the variation of actual loss from the
expected loss and subjective risk is a situation when there exists uncertainty. Moreover, risk can
further be classified into pure risk and speculative risk that is, natural risks and financial risks,
respectively. Some techniques of risk management are – avoidance, transfer, acceptance, and
mitigation. Out of these approaches, avoidance is the easiest way for an organisation to manage
its identified risk (Aven, 2012). The next approach is mitigation of risk where the business can
opt to manage their risk either through mitigation or reduction. Here, with this approach, the aim
is to reduce the negative consequences of the known risks (Kaewunruen, Sussman & Matsumoto,

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2016). The measures to strengthen risk management processes and technology involve a
reduction in the costs linked with customs and enabling cross-border agencies to inspect the
high-risk products and to streamline the processing of low-risk products. Channel Maldives
Limited is now implementing changes to improve risk management controls and to strengthen
the trade environment.
Islamic Insurance
According to the history of Islamic Insurance, each tribe tried to protect their life as well
as the property of its tribe members, and eventually, this loyalty manifested into mutuality and
collective responsibility (Salman, 2014). The modern risk management strategies translate into a
safer and more efficient trade procedure (Kristiansen, 2013). Since the mode of payment was
either cash or kind, it reduced the events of bloodshed and blood- feuds in the country along with
the financial burden on an individual. In addition to this, it also develops the spirit of cooperation
and brotherhood amongst the members of the tribe by replacing individualism, and it eventually
helps them to achieve social security (Salman, 2014). Moreover, according to the Shari’ah
Prohibition of Conventional Insurance, all the contemporary jurists agreed on the permissibility
of mutual insurance (Kristiansen, 2013). The Shari’ah contacts in Takaful include both unilateral
and bilateral contracts where the bilateral ones are subdivided into six types that is, contracts of
exchange, security, and partnership, custody, pertaining to perform a task, and pertaining to the
utilisation of usufruct. There are some prudential requirements in order to undertake Islamic
Insurance such as the minimum paid-up capital is 10,000,000 Rufiyaa for each type of business
insurance (Hu, Gurnani & Wang, 2013). The birth of the Takaful Industry in Malaysia took place
in the early 1980s to complement the operations of the Islamic Bank as well as to cater to the
needs of the Muslim public (Hu, Gurnani & Wang, 2013). The basic principles of Takaful
according to the Islamic values are – invest in Shari’ah compliant funds; eliminate uncertainty
when it comes to subscription and compensation as it is based on donations; every member pay a
subscription fee for the needy ones; and not one member derives advantage of the other (Dikko,
2016).
Strategies and Schemes
The risks faced by the transportation industry varies, but it includes fleet integrity,
retention and compliance issues, and driver safety. Out of these, some risks tend to directly have

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an impact by the outside influences such as weather conditions, road and traffic situations
(Sarwar, 2016). The carriers too abundantly take on other risks as they are responsible for the
delivery of the consignments due to which the shipper is in business in the first place (Sarwar,
2016). Any disruptions such as accidents, loss of cargos and financial issues can lead to a
disruption in the supply chain and eventually damage the reputation of Channel Maldives
Limited and decrease their profits (Kammer et al., 2015). In recent years, access to freight
conveyance capacity has become a persistent concern in the minds of the logistics administrators
because of the shortage in capacity. For Channel Maldives Limited to be a successful state-
owned transportation company, the service has to be reliable, economical, and timely. In addition
to this, managing the transportation network includes program development, project delivery,
and agency management (Kammer et al., 2015). The recent activities taken up by the Channel
Maldives Limited are to facilitate trade and to safeguard its border so as to deliver operational as
well as economic gains in the private and public sectors. Improving risk management practices
and technologies is an economic and high-yield method to improve the efficiency of trade.
Furthermore, to be able to avoid the historical risks, Channel Maldives Limited should make
efficient use of risk analyses to make programmatic investment decisions (Arifin, Yazid &
Sulong, 2013). If CML had not conducted the preliminary audit before implementing its second-
year plan, it would have let them close their operations permanently in a couple of years. So, it
can be said that the key to finding a conveyance risk management resolution is to recognise the
importance of visibility.

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Figure 1: Risk Management Procedure
Greater Government Oversight
The government agencies are functioning to develop service delivery and also to use the
limited available financial and human resources efficiently (Wilding et al., 2012). This strategy
will eventually be beneficial for the traders as less time will be required to import and export the
consignments. At last, this will perhaps increase the predictability of the services and will be
easier for them to perform their tasks.
Modern Attack Surface and the Cyber Exposure Gap
The implementation of strategies is ongoing in the CML. The audit team of CML found
out that cyber exposures and fluctuation in the market are some of the risks that are being faced
by them. In order to overcome the issues, the company started using tools such as heat maps to
communicate the frequency and severity of risks and spreadsheets to register risks (Arifin, Yazid
& Sulong, 2013). Along with this, decisions like asset management, program investment
decisions, reliability-centred maintenance, bridge inspection, tunnel safety and general safety
planning, and performance measure must be taken up to process the identification and
management of the risks.
Communicate

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Figure 2: Characteristics of Insurable Risk
Transportation Resilience to Climate Change
Changes in the weather conditions, the extremity of temperatures, natural disasters, social
hazards and infrastructural outages which were the most common risks faced in the last four
years will be resolved with the implementation of the risk management strategies (Arifin, Yazid
& Sulong, 2013). The identification and evaluation of risks allow transparency is risk allocation
and efficient use of communication strategies improves the decision making, which will develop
alignment within the organisation to attain its strategic goals.
Deteriorating Infrastructure
One of the most common issues that has been being overlooked upon is the deteriorating
infrastructure that includes the highways as well as the byways. The issues range from asphalt
worsening to signage concerns to construction interruptions. All these issues have a negative
impact on the delivery of consignments and tend to cause personal injuries as well vehicle
damage.
CONCLUSION
To conclude, it can be deduced that with the efficient and effective use of risk
management strategies and schemes, Channel Maldives Limited can gain a reasonable return
from its operations and even minimise the losses. The above-discussed strategies will help the
state-owned company to allocate its fund wisely and create a reputable position amongst the
competitors. Lastly, some of the benefits that the company will encounter are – building trust
amongst the public; making the business case; minimising the crisis and promotion of proactive

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management schemes; focus on the key strategies; promotes the understanding of consequences
of failure, and provides a broader set of viable solutions.

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REFERENCE LIST
Arifin, J., Yazid, A. S., & Sulong, Z. (2013). A conceptual model of literature review for family
Takaful (Islamic Life Insurance) demand in Malaysia. International Business
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Aven, T. (2012). Foundational issues in risk assessment and risk management. Risk Analysis: An
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Aven, T., & Zio, E. (2014). Foundational issues in risk assessment and risk management. Risk
Analysis, 34(7), 1164-1172.
Dikko, M. (2016). Establishing construct validity and reliability: Pilot testing of a qualitative
interview for research in Takaful (Islamic insurance). The Qualitative Report, 21(3), 521-
528.
Hu, X., Gurnani, H., & Wang, L. (2013). Managing the risk of supply disruptions: Incentives for
capacity restoration. Production and Operations Management, 22(1), 137-150.
Kaewunruen, S., Sussman, J. M., & Matsumoto, A. (2016). Grand challenges in transportation
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Kammer, M. A., Norat, M. M., Pinon, M. M., Prasad, A., Towe, M. C. M., & Zeidane, M. Z.
(2015). Islamic finance: Opportunities, challenges, and policy options (No. 15).
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Kristiansen, S. (2013). Maritime transportation: safety management and risk analysis.
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Liu, X., Saat, M. R., & Barkan, C. P. (2013). Integrated risk reduction framework to improve
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Salman, S. A. (2014). Contemporary issues in Takaful (Islamic insurance). Asian Social
Science, 10(22), 210.
Sarwar, M. J. (2016). Future Challenge in Islamic Insurance (Takaful) in Bangla-desh. Aust J
Sustainable Business Society, 2(1), 69-80.
Wilding, R., Wagner, B., Colicchia, C., & Strozzi, F. (2012). Supply chain risk management: a
new methodology for a systematic literature review. Supply Chain Management: An
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