MISC Annual Report 2019

CAPTAIN SACHITHANANTHAN ATMALINGAM Head of Group Health, Safety, Security & Environment (GHSSE) Management Discussion & Analysis The stringent HSSE standards that we practice and are now identified with have become synonymous with our identity and is one of the reasons MISC is able to work with the world’s top oil and gas companies One of the main reasons MISC is recognised today and able to work with the world’s top oil and gas companies is because of the very high standards we uphold in HSSE performance. As a further testament to our capability, MISC today operates in highly environmentally-sensitive geographical areas such as the Bering and Barents Seas, adjacent to the Arctic Circle. Such operational risks require a continuous journey of improvement, in line with or exceeding the tightening regulations and expectations of our various stakeholders. In every segment that MISC operates in – Shipping, Offshore Production, Shipyard, Port Operations and Maritime Education – we continue to be among the top performers in terms of HSSE. This translates into the ability to partner gold standard customers of the industry and not merely maintain a license to operate. As a business-to-business company that provides critical services to some of the world’s top oil and gas companies, HSSE is fundamental to the credibility and sustainability of MISC in a demanding industry that has already eliminated the underperformers. Such sustainable HSSE performance translates further into a tremendous brand value for MISC, distinguishing us among peers and earning us a seat as a founding partner of the Global Maritime Forum (GMF) – an international not-for-profit organisation committed to shaping the future of global seaborne trade to increase sustainable long-term economic development and human wellbeing. For MISC to be a part of the GMF is a defining milestone for the company. Membership in the GMF continues to influence how we behave and operate as one of the global industry leaders for which I have no doubt of the commitment and willpower from the leadership to do so. The need to sustain and continuously improve HSSE performance in providing better service to customers therefore cannot be overstated. The HSSE council – chaired by the President/Group CEO with membership made up of all the Vice Presidents and MD/CEOs of Business segments, with permanent attendees in the form of HSSE managers across all businesses – meets each month to review, challenge, guide and support the HSSE agenda. Among the initiatives approved in 2019 were the policy on substance misuse, which is at par if not better than the industry best practices, and Security Policy & Management System which has been institutionalised throughout the Group. The journey towards a generative HSSE culture continues to expand the leadership’s strategic and operational focus, from the conventional lagging indicators to encompass leading indicators with in-depth analysis and review and agreed actions. Leading indicators such as reporting of near misses, Unsafe Condition Unsafe Act (UCUA) reporting (which exceeds more than 100,000 reports annually), training, management walkabouts and behavioural HSSE allow interventions before an accident or incident happens and prevents anyone from getting hurt. Generative HSSE culture requires a paradigm shift where every individual takes full personal ownership of HSSE, wherever they are and whatever they are doing. One way for us to drive that mindset change is to work in an integrated way while being constantly open to possibilities to work, learn and create value together in areas of HSSE. Such initiatives provide opportunities to break down silos and strengthen our HSSE culture. The areas covered by HSSE are now a lot wider with new business risks such as managing the threats from cybersecurity and the need to protect the environment through biodiversity conservation. As a global industry leader, the MISC Group strives to be one that embodies in-depth knowledge of challenges, together with an understanding of risks and potential solutions in each segment of the industry that we face from the perspective of HSSE. With such a staunch approach, we can stand shoulder to shoulder with the best to thrust the industry in the right direction. To further this, we are currently establishing a Maritime Centre of Excellence function under GHSSE that will facilitate coordination at Group level with the potential to work with industry experts, academia and regulators through partnership in a systematic way with clear objectives, priorities and distinction. The Maritime Centre of Excellence has the potential to establish MISC as an influencer and distinguished as a reference by the industry. The Management is committed, as part of Enterprise Risk Management, to prioritise cybersecurity as one of the biggest threats to our business. With global enterprises, big and small, continuing to struggle to keep up with perpetual risks that are emerging in cyberspace and the information explosion, an integrated MISC team worked with international risk cybersecurity experts to stress test our systems and provide a comprehensive analysis of the state of our enterprise preparedness. MISC engaged a leading international Cyber Security Organisation working with LCSC, ICT and GHSSE to conduct a comprehensive group-wide cybersecurity assessment to ascertain our state of enterprise preparedness. We have now adopted the recommendations based on internationally recognised frameworks to manage cybersecurity risks and are currently in the process of setting up a cybersecurity team under GHSSE, away from traditional structures under information and communications technology, to provide a visible independence and prominence to accelerate achieving the cybersecurity management objectives i.e. to ensure cybersecurity risks are sustainably managed as low as reasonably practicable (ALARP). Emails, for example, must now comply with the guidelines of the National Institute of Standards and Technology (NIST) Cybersecurity Framework for identifying, detecting and responding to cyber-attacks. Even thumb drives are prohibited unless they are officially issued and encrypted by the company. Our philosophy of being a leader is also reflected in our environmental sustainability and biodiversity efforts, with a focus on the conservation of clusters of coral reefs in the Southeast of Peninsular Malaysia. Besides the scientific and technical work to be undertaken with a non-governmental organisation which is an expert partner, from a sustainability perspective, we have also envisioned co-creating values with local communities in areas such as waste management, including plastic waste through volunteer work. As much of MISC’s livelihood is derived from seafaring, offshore floaters, shipyards that provide heavy marine engineering solutions, port operations and training ocean-going professionals, it is only natural for us to give back to the ocean. The biodiversity conservation project has the potential to be replicated in other parts of the world in the future where MISC is present. MISC successfully celebrated its golden jubilee last year and it is our intent to continue to prosper for another fifty years. As such, we are here for the long run and by moderating our risk appetite we can hedge our risk exposure. HSSE will continue to remain at the core of what we do and it will be part and parcel of our DNA as a responsible, safe and sustainable company. CAPTAIN SACHITHANANTHAN ATMALINGAM Head of Group Health, Safety, Security & Environment Operating Safely and Sustainably H E A D O F G H S S E ’ S R E M A R K S 139 138 OUR BUSINESS PERFORMANCE MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019