A Bayesian-loss function-based method in assessing loss caused by ship-source oil spills in the arctic area

It is difficult to assess the risk of ship-source oil spills in Arctic waters for insurance purposes due to many unknowns and the lack of reliable data. However, maritime activities in the Arctic area continue to grow, indicating the urgent needs for the development of innovative methods to estimate loss from potential ship-source oil spills in the Arctic area. To fill this gap, we develop a hybrid Bayesian-loss function-based method to assess ship-source oil spill-related loss and implement an illustrative test on Baffin Island, Nunavut in Canada. The results confirm that our method can accurately assess loss and, subsequently, develop reliable insurance premiums for shipping activities in the Arctic area. This enables governmental and nongovernmental organizations alike to use the method as a reliable loss estimation mechanism for ship-source oil spills. Also, it is a valuable tool in designing measures for safer and more resilient Arctic shipping.