WCO Risk Management Forum - Opening Speech by Kunio Mikuriya, WCO Secretary General

01 July 2010

WCO Risk Management Forum

Brussels, 28-29 June 2010

Opening Speech by Kunio Mikuriya, WCO Secretary General

Good morning.

It gives me great pleasure to see so many of you here today attending this important event.

I am especially appreciative for the attendance of Customs officials and our partners from the private sector, international organizations and the academic world.

The theme of this Forum is of course Customs Risk Management. This is a familiar term to all of us in this room, but what does it really mean?

Risk management is perhaps the most frequently discussed Customs topic both in this building and in Customs administrations worldwide. It is embedded in the WCO’s core instruments, such as the revised Kyoto Convention and the SAFE Framework of Standards. Even so, it is a topic that still requires more clarity and understanding.

This, in essence, is the objective of this conference – to help build a foundation for better understanding and implementation of risk management both operationally and strategically. Moreover, the WCO is committed to help those of its Members that seek capacity building assistance on risk management.

Indeed, I am certain that by sharing best practices and country experiences, this Forum will strengthen our understanding of how risk management can assist Customs administrations to be more effective and efficient, and thus more successful.

We are very fortunate because we have over the next two days an impressive array of risk management experts with different backgrounds, and I am grateful for their attendance.

Purpose of risk management

In the Customs context, risk management means scarce resources must be targeted at the higher end of the risk continuum.

There is no doubt that whatever the priority of a Customs administration, whether it be revenue collection, security, drugs, IPR, or environmental protection, risk management is essential to promote effectiveness while not wasting scarce resources.

There is also a clear link between risk management and coordinated border management, in particular, to achieve better coordination between different border agencies, there is a need to improve information sharing and pursue similar risk management approaches. Customs can take the lead on this to promote a whole of government risk management approach at the border.

We also face other challenges. As you know, the 100% container scanning law in the US is in conflict with risk management. The law would require that all goods be scanned, even low-risk goods. But it is clear that 100% scanning does not equal 100% security. This is why I have strongly lobbied against this policy and it is clear progress is being made. Together, working with our partners in the private sector, we are making a difference. It is likely that implementation of the law will be deferred at least until 2014, and there is growing opposition within the US Congress. I remain hopeful this law will eventually be amended or repealed.

WCO risk management tools

In addition to the WCO’s core instruments, we have developed a number of tools to assist WCO Members in implementing risk management principles within their organizations.

Key components of risk management include information technology, intelligence, risk assessment, profiling, selectivity, risk indicators, and the availability of data.

To assist our Members, the WCO has made great strides in each of these areas in recent years.

From a risk management and risk assessment perspective different technologies play a crucial supporting role. The annual WCO IT Conference, and the more recently introduced WCO Technology and Innovation Forum, cover IT software and hardware in the Customs context. This provides WCO Members with information and knowledge on the latest software systems and inspection tools available to help both back-office and frontline Customs procedures.

On intelligence, the WCO developed the Global Information and Intelligence Strategy (GIIS) which sets out what intelligence is, how it is created, for whom it is being produced, and why it is needed. The GIIS also sets out the intelligence cycle, namely the fundamental principles and processes that underpin all intelligence activity.

Risk assessment, profiling, and selectivity are crucial because they contribute to successful controls – stopping illegal trade but facilitating legal trade. The WCO has developed several training modules on these important objectives.

Regarding risk indicators, the WCO has several tools that identify the most common risk indicators; these include the Standardized Risk Assessments and the Handbook for Customs Officers on Risk Indicators.

On data, we have established the National Customs Enforcement Network (nCEN) which offers numerous features, including a database of seizure data, an alert system, and a communication network. We plan further expansion of the CEN to WCO Members who wish to have access to this valuable tool. In addition the WCO Council has just endorsed the approach of the Ad Hoc Working Group on Globally Networked Customs and it is anticipated that nCEN will be the backbone for the exchange of risk management information.

Risk Management Compendium

The WCO also has a Risk Management Guide that provides an overview of the Organization’s understanding of risk management. But because this document is quite dated – it was developed in 2003 – the WCO is designing a Risk Management Compendium which will be a comprehensive document that provides a methodology and a framework for implementing risk management, together with instructions, methods and examples to apply risk management and risk assessment.

The Risk Management Compendium will consist of two Volumes:

· Volume 1 will be strategic and is intended for Directors General and upper Customs management. It will outline how a risk management culture can be implemented across an organization.

· Volume 2 will be more operational in nature and is intended for frontline officers. It links the use of intelligence holdings with the risk process and provides templates and guides for selectivity, profiling, and targeting.

The WCO is of course not developing the Risk Management Compendium on its own – to ensure it is comprehensive, accurate, and relevant, staff of the WCO Secretariat are working with Customs administrations, the private sector, the International Standards Organisation (ISO) and academia to produce the best possible product. And I am grateful for this assistance.

There will of course be a capacity building component to the Risk Management Compendium. The WCO will be delivering a series of six regional Risk Management Workshops based on the preliminary versions of the Compendium. These workshops will also serve as a mechanism for gathering WCO Members’ experiences to support the draft Compendium.

The final version of Compendium will be submitted to the WCO Council in June 2011 for approval. As one of the objectives of the Compendium is to present the implementation of risk management programmes through as many case studies and practical examples as possible, this Forum will also play an important role in this regard. I expect that the Forum discussions will help fuel the development of the Compendium.

Panel discussion at the WCO Council Sessions

A special panel session on risk management took place at the WCO Council Sessions last week. The Council panel was intended to serve as a strategic platform for high-level discussions on risk management among Directors General of Customs. There is not enough time to discuss all of the panel discussion outcomes, but let me share with you a few of the highlights.

There was consensus that a balance between controls and facilitation is crucial for both Customs and the trade, and the only way to achieve this is through risk management.

There was agreement that Customs knows enough about risk management theory but what is needed is more knowledge about implementation, through the sharing of best practices and researching case studies.

Regardless of the mode of transport (maritime, air, or road) or an organization’s priorities (e.g. revenue, facilitation, security, etc.) risk management can make operations more effective and efficient.

There is a continued need for Customs-to-business cooperation on improving risk management systems, and to achieve this there must be more information sharing and awareness raising.

Even the best risk management systems and procedures will go wrong from time to time, therefore, there must be constant refinement and improvement.

Technology (both hardware and software) makes it much easier to establish or strengthen risk management, and this is why the WCO places great emphasis on technology capacity building, such as the upcoming Technology and Innovation Forum that will be held in Cairo in November.

While WCO instruments like the revised Kyoto Convention bring coherence to risk management, different national situations and priorities are relevant to the functioning of risk management systems in practice.

Conclusion

In conclusion, I would like to again thank you for your attendance and interest in this crucial issue, not only for Customs, but for successful international trade operations.

I look forward to fruitful discussions and the Forum’s conclusions.

Thank you for your attention.

Links

Click here to read the Secretary General’s Concluding Remarks.