Facilitating Trade:
Improving Customs Risk Management Systems
In the OIC Member States
22
2.3.1 Benefits for Government Authorities
Resource Allocation. A benefit that Governments and Customs Administrations could gain by
implementing CRM is improved allocation of resources. Working with limited human, physical,
technical and financial resources while facing increased movements of goods and means of
transport, drives CAs into “strategic thinking” mode. Under such circumstances, CAs can decide
the allocation of the limited resources to the border crossing points where the risk is higher.
Improved allocation of resources, especially human, will ensure that the existing skills and
experience in the administration is effectively used and will yield better results in achieving the
main objectives.
Quality of Customs Control. By implementing the CRM, CAs prepare themselves for the future.
The quality of customs controls is improved by analyzing and predicting risks and focusing the
most critical resources on the areas of highest risk. Superficial control of everything and
anything will be replaced with exhaustive controls over those movements and shipments that
pose highest risks. A CRM that embraces evaluation of outcomes and control feedback will allow
the management to identify operational weaknesses and improve current control procedures to
increase operational efficiency.
Revenue collection and protection, security and safety of society. A CRM that results in
improved quality of customs control is beneficial for the Governments because CAs is the critical
authorities in revenue collection and protection of society against prohibited or restricted
goods. Focus on revenue collection remains the primary objective of most CAs. The CAs in the
developing countries are focusing on revenue collection since this is the primary means of
funding government operations.
Public Credibility. Effective CRM guarantees equal implementation of laws and regulations for
all domestic and international legal entities and persons. This will boost the public’s confidence
in the customs activities. The public would trust administrations more if they used clear criteria
to identify acceptable and unacceptable levels of risk.
2.3.2 Benefits for the trading community
Lower costs for the private sector. Risk management is a central aspect of building a trusted
partnership between traders and Customs administrations, as it rewards traders’ compliance.
Traders obtain the benefits of lower inspection rates, lower cost and time for customs
formalities, in return for their investments into compliance. Having a solid basis of CRM and
compliance management enables customs administrations to adopt schemes such as authorized
economic operators, which provides various simplification measures for traders meeting
multiple criteria of good compliance and record management.
Supply Chain Security. The development of partnership programs with other parties to the
overall supply chain is a CRM tool that helps minimize disruptions to the supply chain. The
emerging principles underlying a public-private partnership approach to cargo security can be
summarized as a “trusted supply chain partner program.8” This is similar to the C-TPAT:
Customs-Trade Partnership against Terrorism9, of the US Customs and Border Protection
program through which the administration works with the trade to strengthen international
supply chains and, at the same time, improve border security. The main actors in such a program
can be companies managing the global supply chains; port and border crossing authorities who
8 Kleindorfer, P.R., Saad, G.H., 2005. Managing disruption risks in supply chains. Production and Operations Management 14
9 More information about this program can be found here:
security/ctpat