RMS Titanic-A Tragic Ending; Analyzed by Risk Management Cycle PDF

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1 RMS Titanic- A Tragic Ending; Analyzed by Risk Management Cycle Md. Arif Hasan Khan1*, Md. Shoriful Islam2 Lecturer in Finance1*, Lecturer2 Department of Business Administration1, Department of Tourism and Hospitality Management2 ...

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

RMS Titanic- A Tragic Ending; Analyzed by Risk Management Cycle Md. Arif Hasan Khan1*, Md. Shoriful Islam2 Lecturer in Finance1*, Lecturer2 Department of Business Administration1, Department of Tourism and Hospitality Management2 Northern University of Business & Technology, Khulna1, Islamic University, Bangladesh.2 Corresponding Author’s Email Id: [email protected]*

Abstract British Titanic was the luxury passenger liner, which was alleged to be unsinkable. It was completely unacceptable of sinking of Titanic on April 15, 1912, which was the most notorious shipwrecks in the history, but killed 1502 passengers on her maiden voyage of 2228 passengers and crew after colliding with an iceberg. International community was highly shocked by this sensational tragedy and insisted to conduct the better maritime safety regulations.

However, there were many reasons behind the huge loss of life of titanic ship. Those who survived in the sinking there was involved some elements of luck than who did not surviving. The main intention of this research is to identify the risk factor of this incident and where was the lacking of this voyage and how it could be avoided in that time by taking which precautions. The paper reflects how simultaneous supervision of the crisis affected the evacuation of passengers, staff and crew from the liner. A web of influential causes is expressed, and it is determined that, as in many other large, multifaceted events, no single factor emerges as foremost and the disaster caused from systemic failures as much as from human error.

The first section of the article is a historical overview of the Titanic disaster. This section includes statistics on the Titanic and a time line of the disaster. The next section of the article is a discussion about risk management cycle 42

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

and its analysis in step by step and along with of the substantial failures and strategy flaws that contributed to the speedy sinking of the Titanic. The article accomplishes with an evaluation of the causes and effects of the speedy sinking of the Titanic. In addition, the supposition delivers a future perspective and suggest for improving the risk management.

Keywords: - RMS Titanic, Tragic ending, Risk management cycle,

portfolio. Usually, a risk is an uncertain

INTRODUCTION In

the

risk

events and projects objective can be

management always plays an important

affected by the positive or negative

role in minimizing the risk and helping to

influences. On the other hand, the main

identify potential risk for the company or

thing of risk is uncertainty and future of an

organization. Risk management process

event are depended on this, either it will

goes through an identified structure which

happen or not. No doubt, the probability of

is fully compliant and with control

an event occurring and result usually

strategies as well as the numerical

seemed as two mechanisms which are the

determination and monitoring of all risks

main features of the risk. Indeed, it should

which

determine the effects of the risk either it is

43

management

are

applicable

process

to

identified

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

positive effects or negative effects. If it

METHODOLOGY

(risks) has the negative impact, then a

The

solution

found.

evaluation of the causes and effects of the

Otherwise, if it has positive impacts then

speedy sinking of the Titanic. In addition,

we could get some benefits from those

the

risks which may be a constructive

perspective and suggest for improving the

opportunity for us and it may make our

risk management.

to

tackle

must

be

article

accomplishes

supposition

delivers

with

a

an

future

project more effective and profitable as well.

TITANIC DISASTER OVERVIEW It took three years from build to ready to

Risk

management

(hereafter,

set put out to sea on her first voyage from

RMP) going through some stages like to

South ampton to New York along with

detect

the

2200 passengers who are highly reputed at

probable incidence of losses, approaches

that time in the society like movie stars,

of handling risk, implement the risk

comprising millionaires, school teachers,

supervision methods and monitor the

emigrants, and some of those who are

outcome. So, it’s clear that all RMP are

looking for better life in USA. Titanic was

not complex and easy to adjust. Obviously,

making swift advancement across the

focusing on objectives, the company must

Atlantic after having some breaks to sweep

lose their track to make the profit without

few final passengers; the titan's vessel was

considering the risks if any of these risks

led at teeming speed directed to New York

happen, so RM should be the key part for

City.

important

process

risk,

evaluate

any type of organization. After 5 days of her (Titanic Ship) maiden voyage on April 15th, 1912 it was collided with the iceberg and sank. However, this essay with the help of main ideas and using the Risk Management Cycle is trying to recognize in which stage those cycle had been implemented in right and wrong way to Titanic vessel disaster at the Atlantic Ocean. 44

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

However, just before midnight, at 11.40pm

emergency procedures. About 1500 people

alarm sound from the viewpoint while

were died due to mainly two causes:

saying about Iceberg, immediately right side, but unfortunately that was too late to

i.

die in the sinking vessel,

ii.

death due to freeze in the ice of North

take initiative to tackle the iceberg, only after 40 seconds the massive ship was struck, scratching a series of holes and

Atlantic

almost six watertight compartments were

passengers were survived, most of

breached and within one hour it was

them were children and women. A

flooded, pull down the ship, whereas, in

percentage of distinguished citizens of

that time the ship was broken in two parts,

British and American passed away in

while one- half was absolutely in vertical

that disaster, as well as the renowned

position

floor.

British journalist William Thomas. A

Approximately, on the morning of the 15th

huge number of people including crew

around 2.20 am the massive ship was

member (3/4th), 1/3rd of 1st class

under the surface about 4 km down of the

passengers, 92% of the 2nd class and

Atlantic Ocean before 400 miles to

4/5th of the 3rd class compartment

Canada. As it is proved that there was the

failed to endure in that distressing

absence of risk management as well as the

tragedy of marine in the history.

above

the

ocean

water

and

almost

scarcity of lifeboats, lifejackets, and

45

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700

Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

RISK

MANAGEMENT

CYCLE

help of risk management cycle (supported

ANALYSIS

by William Jr. et. al., 1998) trying to

Risk management cycle

recognize the phases which had been

Risk Management cycle is to stop the

applied in right and wrong way in the

threats before any sort of fruitful action by

titanic risk management procedure.

identifying, addressing, and eliminating the potential risks which are the main objectives of a series of steps. [Boehm, 1989]

In

another

way,

a

successful

risk

management procedure will incorporate some stages, like; risk identification, risk measurement, risk analysis, risk decision along

with

the

nonstop

risk

implementation and monitoring. By the 46

Figure 1. The risk management cycle

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

Figure-2: Body part of Titanic Ship

Stage Analysis a) Risk Identification In this step try to identify which risks (or opportunities) associated with the project? It is not wise to recognize the probability of a risk at this very initial stage, which should be done in later stage in a strict way.

What was Right

-

The titanic could avoid any times of collision because it had 16 major watertight compartments in its inferior segment which was very modern.

What was Wrong

-

Captain smith of Titanic Ship had a bad record at past to get involved with a collision with British Warship in 1911 while driving Olympic ship which is

-

-

-

In that time of 1912, Titanic had the best radio wireless system among any ship over the world. To communicate efficiently, crew members were well proficient to use extensive range of wireless system via “Morse code”.

considered as Olympic fault. Founded on his recent records, we may come up with a question whether captain smith was good enough to bring about the titanic. However, many upper classes people treat him as a millionaire’s captain and those people

To handle some unanticipated illness, there were sufficient medical services on board for travelers. It is found on enquiry that, there was enough life vests around 3500 for all passengers of Titanic but which had no proper grumbles. 47

claimed on maritime only with him. (Gee, 2012)

-

The massive ship’s speed was too fast for that iceberg surroundings.

-

Watertight compartments signified as a

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

100% risk to the project and construction workers noted that as a maximum risk factor of the project at that time but unsuccessful to lessen it by creating satisfactory risk management plan. The design at the lower section of the watertight compartments were very poor according to the brutality of the disaster (Bassett, 1998).

-

A regulator and specialist care group was formed and in charge of recognizing, counselling, and justifying risks and difficulties during the construction period, which was later acknowledged as the assurance group (Green, 2005). The titanic administration did not analyze this risk in this aspect even with risk mechanism. As a result, sternness of the tragedy enhanced by the ignorance this issue.

-

There was not enough training program for the crew members regarding active shooter occurrences,

fire

security

and

cyber

security” (Mcpoyle, 2012)

influenced

b) Risk analysis Risk

analysis

distribution.

In

precisely, these factors like severity and

diverse

frequency will be measured to estimate the

information about the risk probability

expenses and welfares of loss control

distribution in addition to presenting how

(Harrington & Niehaus, 2003). In the risk

the risk management procedures could be

analysis, technical, external, organizational

48

with

are

this

actively

engaged

activities

by

receiving

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

and

management

risks

are

mainly

require instant consideration and must be

included. Most important risks need

fixed before taking place with the project.

documented risk replies while serious risks

What was Right

What was Wrong

- Fred and Reginald lee the two - Smith often confessed for having no watchmen still tried to do their job at that freezing night at 11.40pm from the crow’s nest. Fred discovered something strange throughout the darkness in ahead and tried to notice by the binocular to observe but unfortunately, binocular was locked in a box and could not find out the key. So finally, he tried to apply his own eyesight to recognize that strange which was dusky and gigantic out there. It supposed to be an iceberg predicted by him and rang the alarm bell instantly three times to warn the bridge of something ahead and after that trying to warn by using telephone to William Murdoch (first officer) that Iceberg was right ahead.

experience of facing near disaster. The officers who were on the ship at that night with Titanic had no experience and not well trained about the lifeboats, besides also had no idea about the holding capacity. Managing

Director

company

infatuated

of the

the

shipping

captain

to

complete the Atlantic within six days, so he always insisted captain not to reduce speed. When Jack Smith was focused on replying messages to first class passengers and in the meantime, was interactive with Cape Race Lighthouse, he received a message from adjacent ship proclaiming about the massive iceberg. As a result, he could not concentrate on the message and could not take initiative. Subsequently, he was inept to accept the iceberg warning from other vessels (Sun, 2012).

- The ship was made of sub-standard. - Iron and that’s why Titanic was break apart in two portion.

49

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

c) Risk decision The main task of this step is to establish the strategies to manage the identified risks. Risk control and risk financing options are the two main popular approaches to minimize the risk if something find out in this stage. Risk financing is only triggered after a loss occurred (Williams Smith, young, 1998).

What was Right - An emergency step had to be done after hearing the alert about the iceberg which was in the right of the ship. William Murdoch who is the first officer instantly originated the solutions. After that he ordered to Hitchens the sailor of the ship, to turn the wheel in the direction of the portside along with navigating bridge. He also communicated with the engine room to move back the engines from the way they were in.

What was Wrong - An enquiry discloses; it was known by the smith that Titanic was going ahead to the iceberg zone. However, he competed his diner early with first class passengers and go to bed while William Murdoch the first officer was doing his job of fudging the ice - Though there were some warnings about iceberg, but the captain Smith decided not to reduce speed and keep the full speed (around 20 Knots). Before the crash occurring, the weather was clear and nice which had no reason to reduce the speed for him (Hamilton & Wilkinson, 2012).

d) Risk implement The process of signifying strategies and movements to augment and as well as diminish the intimidations of the projects goal is called the risk implement. What was Right

-

In every five or six minutes interval captain Philips fired the skyrockets to get the responds from other vessels in that area but they did not while Boxhall (Officer) and quartermaster Rowe getting tired to release rockets frequently to make them understand that how serious the time was at that moment.

-

Around the 12.30am the lifeboats let down by the order of captain Smith where women and children were loaded to that.

50

What was Wrong - Lifeboats were insufficient where capacity for half of the titanic passengers, but in that moment, they sent away women and children first, where few women and children in Titanic and there was still more space for other people. Officers at that moment in a shocking situation & tremendous pressure as well and could not think properly. They thought if the passengers overloaded then it could be damaged.

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Journal of Banking, Finance and Insurance Management Volume 3 Issue 1

e) Risk monitor The main objective of this stage is to assess and scrutinize every step, which had been executed according to risk management cycle. This stage includes setting up strategy and actions grounded on the day-to-day risk management purposes through risk revising and monitoring.

What was RIGHT

What was WRONG

- The White Star Line after the Titanic disaster - No evidences found. improved the design of other vessels. The first change to avoid comparable disaster in the forthcoming was encompassing the dual bottom up the edges of the hull. If the body imaginary to be triumphed by a smash, water could only spill over the space between the internal and external sidewalls which would endure the watertight partitions unspoiled. According to the second change, the split ends of the diagonal bulkheads ...