1. ERM In Logistics and supply chain
Carl Leeman
Chief Risk Officer
Katoen Natie

2. can only be efficient if it is
Risk Management
can only be efficient if it is
Enterprise wide

3. ERM what’s in the name
A methodology to ,as good as possible, realize the goals set by a company, and to continue doing so.
A culture of which the company, and thus all its employees have to be committed to .
A strategy is easy to copy, a culture is very difficult to copy .

4. Business Unit structure
Katoen Natie HQ
Corporate Services IT
Engineering
Finance
Risk
Specialty Chemicals
General Cargo & Commodities
Petrochemicals
Projects & Engineering
Consumer Goods & Industry
Liquids
Process Technology
Port Operations

5. KTN Risk Management Vision
Corporate Objectives
Budget
BU Objectives
Strategy & operational planning
Risk identification
Risk evaluation
Identification of
existing controls
Action plan
(Internal)
Reporting & Communication
degree of risk
Risk response

6. Business Approach
Resources
Risks
Return

7. THE RISKS OF DOING BUSINESS
1. COUNTRY RISKS
2. CLIENT RISKS
3. PRODUCT RISKS
4. CONTRACT NEGOTIATION RISKS
5. SUPPLIER RISKS
6. RISKS OF PERFORMANCE DIFFICULTIES
7. BRANDNAME / REPUTATION RISKS
8. RISKS OF DAMAGES
9. ENVIRONMENTAL RISKS
FERNAND

8. EU laws on RM
-In most EU countries we see a lot of rules and regulations
on RM for Banks and other financial institutions (Insurers).
-We see very few- to none, for non-financial institutions.

9. ERM, how to proceed : Identification Evaluation Handling
It will be impossible to handle all risks detected.
One will have to make (difficult) choices and/or set priorities.
It is always better to make the wrong choice than no choice !

10. RISK MAPPING Financial impacts (quantitative) & non financial impacts
Financial metric : EBITDA, Result, assets, …
Non financial metrics : victims, reputation, legal disputes, …
Period of assessment : choose a significant period according to risks
likelihood
Impact
Risk MATRIX
Qualitative Scale
Quantitative scale
Likelihood scale
Severity =
Level of Impact + Level of likelihood
Level of impact x Level of likelihood

11. The (new) Bermuda Triangle
Time Pressure
Complexity
Risk Averse Society

12. Why expanding outside of Europe ?
By 2030, 93 per cent of the world’s middle class will live in what is currently termed emerging markets.
For big expansion we have no choice than to look for new business outside Europe

13. Headline Risks (International expansion)
Currency and pricing
Supplier/Customer insolvency (1)
Pandemics
Cyber risk / IT failure (3)
Forecasting / demand risk
Political Instability
Climate change
Single sourcing
Strikes / Disputes (2)
Natural catastrophes
Brand Reputation damage
Intellectual property
All can impact the supply chain in different ways

14. Do not forget to, amongst others :
Identify key points in your supply chain that control flows of information, physical goods or money so that risk & audit attention can be focused on these areas
Try to identify what can be controlled, what can be influenced and what can only be monitored.
Allow scenario planning and stress testing by taking out elements and disrupting flows.

15. Supply Chain Risks, the challenges
understanding your supply chain
Assessing the risk
Mapping the interdependencies
Developing solutions
The increase in outsourcing to suppliers in more remote / exotic locations, combined with an increasing time and rate pressure is probably the main change in supply chain over the last 10 year

16. Analysis of supplier locations

17. Analysis of supplier locations
Earthquake

18. Analysis of supplier locations
Earthquake
alysis of supplier locations
Flood

19. Analysis of supplier locations
Earthquake
Flood
Storm

20. Problem is often elswhere
Out of Incidents that disrupted the supply chain
60 % happened at a tier 1 supplier
30 % at tier 2 supplier
10 % at tier 3 or further
(Survey from the Business continuity Institute (USA)

21. Some importants elements in your Risk Management
Contracts / General conditions
Compliance
Crisis communicatie

22. Algemene voorwaarden
Tracht gebruik te maken van sectorvoorwaarden eerder dan eigen voorwaarden
Zorg dat uw algemene voorwaarden rechtsgeldig zijn , dwz :
1 Klant moet ze gekregen hebben voor aanvang van de samenwerking
2 Klant moet de volledige tekst gekregen hebben
3 Klant moet in de mogelijkheid geweest zijn ze af te wijzen.
Zorg dat U met alle klanten & leveranciers duidelijke afspraken hebt.
(liefst op papier en getekend) (pas op met AV & ondertekening)

23. Essence of contract’s Client gives an order We execute the order
The client has to pay for what we did.

24. Important elements in our contracts
Scoop of the contract
Term of the contract
Rate & Payment Terms
Limitations & Exclusions of liability
(KPI’s)

25. Contracten
Zorg dat je zelf een contractvoorstel hebt dat rekening houd met de specificiteit van je activiteiten, en de regio waar je opereert.
Tracht steeds te vertrekken van jouw tekst.
Durf contracten / business te weigeren als er totaal geen evenwicht is tussen (potentiele) opbrengst en de te nemen risico’s.
Commerciëlen die (vooral) op commissie werken durven hier makkelijke tegen
zondigen.

26. But sometimes things go wrong
Instructions from client are vague.
Parties may have different understandings about the same item.
No traces of verbal agreements
Sometime, in order to please the client, we put ourselves in trouble.

27. Typical issues with Supply chain contracts
We often start to work without written instructions or clear agreements
Client changes his mind …….!
Make sure to have clear instructions and to explain them to operational or
administrative people.
Follow up if you are paid in time for everything you did
in some cases 20% of what was done was not invoiced
On average clients exceed payment terms by 30%

28. Compliance
Wat is dit : Voldoen aan alle wettelijke verplichtingen waaraan U met uw bedrijf en
haar type activiteit moet aan voldoen.
vb : Explotatie vergunningen, bouw vergunningen, Milieu vergunningen
Verplichte verzekeringen (BA auto, AO, OA Brand…….)
Administratie personeel (contracten, kwalificaties, keuringen,….)
Wettelijke keuringen (machines, hefwerktuigen, installaties,…..)
Andere Nationale, Europese of internationale wetten en regelgeving
Maar er is meer : - Corporate Social responsibility
- Business Ethic’s
- Verantwoord ondernemen
- Corruption & Bribery regulations (UK Bribery Act, US FCPA)
In de praktijk is één en ander niet eenvoudig zijn.
Ook hier zal men prioriteiten moeten stellen na (grondige) analyse

29. Corruption & Bribery Rules & Regulations
1 ) US Foreign Corruption Practices Act (FCPA)
Exists more than 30years but increased dramatically the last 6 years
Only a minor US connection is sufficient for US authorities to enforce FCPA rules
The FCPA prohibits US companies & individuals from bribing non US officials.
Wide variety of industries investigated (oil & gas, Healthcare, pharmaceuticals, transportation, etc. .)
8 out of 10 largest FCPA enforcements involved non US companies & citizens
Reality : - Siemens paid 800 million USD to settle US anti corruption charges
(on top of same amount to German authorities)
- FCPA : : 641 Million USD penalties
2010 : 1,8 Billion USD in fines

30. Corruption & Bribery Rules & Regulations II
UK Bribery Act
Effective since July 1st 2011
Regarded as gold standard in anti-corruption laws
Due to Extra –territotial application & aggressive enforcement
Includes strict criminal liabilities for corporate offence of failing to prevent bribery

31. Corruption & Bribery Rules & Regulations III
3) International Anti Bribery Conventions
- UN convention against corruption (2005)
- OECD convention on combating Bribery
(34 members including Brazil, Argentina, South Africa)
- ………..

32. Anti Corruption & Bribery To Do’s
Educate employees & management
Basic rules & standards (Compliance Program / code of conduct)
Companies fundamental values and principles
Policy & Procedure (e.g. (financial) reporting, authority & accountability, Hotline (?))
In M&A’s asset deal instead of share deals can avoid a lot of (liability) problems
To leak (info) or not to leak ?
Clause in contract with suppliers on bribery : No involvement & Hold harmless
Remember the “non, or controlled, subcontracting clause” in suppliers contract

33. Perception ≠ Fact’s

34. CONTINGENCY PLAN Before During After 1)Repair/ Rebuild
warehouse & equipment
Putting in Place & Testing
Talk to local authorities cfr. Crisis center
Up to date on a yearly basis
Alarm
Start up contingency plan
2) Support to clients
3) Handle third party
claims
Evacuation
Fire fighting
Inform : Clients
Authorities
Fire fighters
Neighbors
Social media
Inform People
Check if things are in place as it should be

35. Crisis communication Facing the media Radio / TV I
All declarations, and or external communications should be coordinated
internally in order to have one message towards clients,authorities, employees,
and other third parties.
(What about : subsidiaries versus HQ in different time zones?)
Do not forget:
- to have one spokesman
- to provide all your own employees with the same information.

36. Facing the media : Radio / TV 2
1) NEVER TELL A LIE.
Do not try to hide info, everything does surface sooner or later.
2) HAVE ONLY ONE SPOKESMAN.
Journalists just love to hear contradictory statements; be aware. It is also very
important to provide your own employees with identical information, so that only
one identical version is communicated ‘to the outside world’. (Use also your
WEBSITE / INTRANET to provide that same info to anyone wishing to know it).
3) IF THERE ARE CASUALTIES, ALWAYS SHOW COMPASSION.
4) BE PREPARED FOR THE 3 CLASSIC QUESTIONS:

37. Facing the media : Radio / TV 3
-WHAT HAPPENED?
-WHY DID IT HAPPEN?
-WHAT ARE YOU GOING TO DO TO PREVENT THIS FROM HAPPENING AGAIN?
It is highly likely that you will not know the answers at that particular moment, and that is no problem as long as you show that you were prepared for the situation, say that these issues are still under investigation, will inform them as soon as you have any news, show them
that you are open and that there are no secrets to hide. 
5) NEVER EVER MAKE ANY SPECULATIONS IN FRONT OF THE MEDIA.
If you are not sure about something, then do not say so! “We think that it must have been this or that” = SUICIDE. 

38. Facing the media : Radio / TV 4
6) ALWAYS SHOW THEM THAT YOU ARE IN CONTROL OF THE SITUATION.
“We are going to do this, this and that”.
This will show them that you are well prepared and that you know exactly what to do. 
7) TELL THEM WHEN YOU WILL MEET OR INFORM THEM AGAIN.

39. But, The Most important is to :

40. Make sure all you calculations are correct

41. Otherwise this Can Happen!

42. J.I.M Principle Avoid Jail Be aware of your Image
Continue to make Money

43. Thank you for your attention