Content area
Full Text
Introduction
During the past 60 years, the volume of international trade has increased exponentially. Resources that Customs can mobilize to handle the increasing trade have been, however, limited and their reinforcement have not caught up with the pace of international trade growth (Keen, 2003). The expansion of international trade and pressure from the international trading community to minimize government intervention increased Customs' interest in trade facilitation. To harmonize regulatory control and trade facilitation,1 many Customs have adopted risk management as their dominant philosophy and this was embedded in the Word Customs Organization's (WCO) Revised Kyoto Convention (Harrison and Holloway, 2007). The extensive use of risk management in Customs administration was reflected in a risk management survey conducted by the WCO in 2010; 84 per cent of respondents answered they have adopted risk management in their administration (WCO, 2010).
For Customs, the most prominent risks are non-compliant or illegitimate trade transactions undermining government revenue and dangerous goods threatening society, although risks that Customs should address are all events and activities that hinder Customs from achieving their objectives (Widdowson, 2005; WCO, 2011). Risk management to Customs is a process to mitigate and avoid risks2 hampering achievement of Customs objectives. The introduction of risk management in Customs administrations has brought a change in Customs' approach to risk. While putting risk management in place, many Customs have kept away from their traditional stringent gatekeeper role at borders. They have lessened their regulatory control-oriented administration and minimized unnecessary disruption and cost to legitimate trade and passengers (Widdowson, 2007). Customs have re-engineered their strategies and tactics against risk so to concentrate their resources on the high-risk end of the risk continuum (WCO, 2011) and have launched various forms of risk management programs fitting their environments, such as cargo selectivity systems, post-clearance audit programs and Authorized Economic Operator programs (Closs and McGarrell, 2004). Yet, whereas there have been many upper-level discourses advocating the adoption of risk management in Customs administration, there have been few studies to present substantial methodologies necessary to operate the introduced risk management programs (Hintsa et al , 2011). The lack of research to examine the feasibility, effectiveness and efficiency of risk management programs (Laporte, 2011) has hampered improving the existing programs and devising new ones....