International Journal of Risk Assessment and Management (16 papers in press)
by Lya Soeteman-Hernández, Joost Bakker, Fleur Van Broekhuizen, Nicole Palmen, Yuri Bruinen De Bruin, Myrna Kooi, Dick Sijm, Theo Traas
Abstract: This paper illustrates a comprehensive and systematic approach for the identification of new or emerging risks of chemicals (NERCs) for workers, consumers and the environment. The methodology is composed of three steps: 1) signal identification, 2) signal evaluation and prioritisation, and when necessary 3) follow-up actions for further risk management measures when NERCs have been identified. The process of identifying NERCs varies slightly for each protection target. In the case of workers, the identification process of a NERC is usually triggered by an observed adverse health effect in workers and the likelihood of a causal relationship with exposure to chemicals at the work place. In the case of consumers, the identification of a NERC is based on the collection (worldwide) of information on an adverse human health effect caused by exposure to consumer products, which might eventually lead to the identification of the chemical(s) causing the adverse effect. For the environment, monitoring data for the environment provide evidence for establishing NERCs. During signal identification, new information with regard to adverse effects induced by the potential NERC is gathered using various sources (e.g. scientific literature, news sites, websites, electronic databases, stakeholder networks). Based on this information, the causality between chemical exposure and the adverse effect is evaluated and prioritised in national and international networks. Here, expert groups play a vital role in the identification of NERCs. Finally, for those NERCs where causality with an adverse effect is established, an analysis of possible appropriate regulatory risk management options is made. Such measures in Europe may include the derivation of an occupational safety limit, restricting its use or proposing harmonised classification and labelling. With this approach, NERCs can be efficiently identified with timely recommendations of follow-up steps, to reduce or eliminate the risk of the substance. Further work is needed to improve amplification of signals for consumers and between consumers, workers and the environment.
Keywords: exposure; prioritisation; evaluation; expert group; NERCs; new risks; emerging risks; chemicals; workers; consumers; environment.
Risk management in small and micro construction firms undertaking repairs and modernisation of residential houses: a case study from India
by Milind Phadtare, Anand Gosavi, Tapash Kumar Ganguli
Abstract: This paper identifies risk factors and suggests their mitigation in small and micro construction firms undertaking repairs and modernisation projects in residential houses. It uses a case study approach with a combination of work breakdown structure and fault tree analysis to identify risk factors in repairs and modernisation projects. Fifty two risk factors have been identified. Risk factors such as damage to household goods during shifting, injury to the labourers during shifting household goods, damage to household goods during packing, damage to household goods during unpacking and accidents during shifting of household goods have been found typical for small to micro construction firms involved in repairs and modernisation of residential houses. The suggested risk treatment reflects the lite version of project management and is validated by discussing with construction professionals and owners of small and micro construction firms. Risk retention, risk sharing and risk prevention are recommended for treatment of risks. This study is qualitative in nature and its scope is limited to Indian context only.
Keywords: small firms; micro firms; repairs; modernisation; residential; construction; risk; India.
An agent-based model of rational optimism
by Pedro J. Gutierrez, Carlos Rodriguez-Palmero
Abstract: We prove that, in standard insurance markets, rational agents have an incentive to choose as subjective probabilities those incurring in an optimistic bias, since they imply real and objective net gains. Our agent-based model of insurance markets thus clarifies how rational optimism naturally appears and persists in insurance markets, opening up the possibility to explain the optimism bias observed in other environments on the basis of the theory of salient perturbations. Our findings are consistent with the empirical evidence, showing a systematic and coherent moderate optimistic bias of agents in the assessment of probabilities.
Keywords: agent-based stochastic model; dynamical optimisation in economics; general equilibrium model; Arrow-Debreu securities; subjective probabilities; rationality; optimism bias; game theory.
Economic impacts of avian influenza disease control strategies in USA due to Texas outbreaks
by Jianhong Mu, Bruce McCarl
Abstract: We compared the economic consequences of imposing a quarantine with and without adding vaccination in controlling Avian Influenza (AI) outbreaks. We evaluated the benefits of using a partial equilibrium, the US agricultural sector model, and found that the strategies were not significantly different in their benefits if consumer demand was not reduced by concerns over the outbreak. However, we did find impacts differed when the outbreak was associated with a consumer demand reduction. Specifically, under a scenario where consumers reduced demand by 20%, the quarantine with vaccination strategy was found to dominate the quarantine-only strategy. In contrast, we found the quarantine-only strategy was relatively more cost-effective when there was no demand reduction.
Keywords: avian influenza; vaccination; quarantine; demand reduction; economic evaluation.
Integrated management systems: linking risk management and management control systems
by Thomas Berger, Werner Gleissner
Abstract: The success of a company basically depends on the quality of entrepreneurial decisions taken by the board of directors or the management in general, which means that the systems and tools for preparing such decisions are critical success factors for the quality of decision itself. A companys management systems and especially its procedures for preparing decisions must be in a position to enable the decision makers to weigh possible returns against the associated risks. This is necessary to predict the possible implications of a decision not only on the companys future rating grade but also on the companys value as a measure of success. When a decision is being prepared, their effects on enterprise value and rating grade must be made transparent as part of the decision-making. We argue that this is done best by means of integrated management systems which, in particular, link management control and risk management.
Keywords: risk management; management control system; performance management system; valuation; rating.
Risk assessment in the industrial radiography practice in India using a probabilistic approach
by Alok Pandey, Prashaunt S. Rawat, Avinash U. Sonawane
Abstract: Industrial gamma radiography uses appropriate radioisotopes housed in radiography devices that provide shielding from the ionising radiations, for imaging of the weld joints and castings. The radiography devices are operated manually by rotating the control unit to project the gamma source outside the shielding, in a projection sheath. Deviation from the standard operating procedures or malfunctioning of the gamma radiography equipment may result in potential exposure to occupational workers. Probabilistic safety assessment has been carried out to calculate the probabilities of potential exposure to occupational workers in industrial gamma radiography practice in India. Fault trees were designed for failure assessment of area monitoring instruments, the functionality of which is crucial to ensure safe industrial gamma radiography operations. Operational procedures leading to the potential exposure scenarios have been sequenced in the event tree. The probability of most severe potential exposure category is calculated as 3.506E-04 for open field radiography operations and slightly lower value of 1.293E-4 for enclosed radiography operations. Assessment results identify the contributory factors to potential exposure, with their relative contributions. Results indicate that the probability of potential exposure can be reduced by adopting safe work practice by operators and responsible attitude of radiological safety officers towards trainees and untrained persons.
Keywords: potential exposure; industrial gamma radiography; probabilistic safety assessment; Delphi survey; occupational exposure; radiation protection.
Scenario-based risk assessment model for infectious medical waste collection and transportation system
by Ajay Tembhurkar, Radhika Deshpande
Abstract: It is preeminent to develop a safe, secure and sustainable collection and transportation system for Infectious Medical Waste (IMW). Risk assessment of IMW Collection and Transportation (IMWCT) system is necessary to recognise threats, hazards and vulnerabilities in the area of IMWCT. Planned and optimised routes considering the risk aspect would provide secure collection and transportation for IMWCT. Few endeavours are found towards appraisal of hazards during collection and transportation of IMW, particularly in India. The present paper initiates a scenario-based risk assessment approach along with optimisation of collection and transportation routes for IMW.
Keywords: risk assessment; infectious medical waste; multi-objective ant colony system; collection and transportation system; sustainable transportation; standard risk matrix.
Developing an enterprise risk Management model: the case of the Palestinian insurance sector
by Muthaffar Mansour, Ayham Jaaron
Abstract: The insurance sector, being one of the most prosperous sectors in developing countries, has been immersed in continuous changes to adapt to the new global economic environments and business safety requirements. However, there seems to be scarcity in the current literature of empirical studies to investigate the prerequisites of a healthy risk management model for insurance organisations in developing countries. This paper is an attempt to develop a risk management model for insurance organisations operating in the context of the developing country of Palestine. An exploratory qualitative study using semi-structured interviews, archival documents, and observations were adopted in this research inquiry. Data were analysed using the thematic analysis approach. Although data analysis shows that Palestinian insurance organisations managerial practices are relatively in regulatory compliance with risk management practices, the results highlight the necessity of providing a supportive organisational culture and capacity building functions to provide highly qualified insurance professionals as a cornerstone for insurance companies competitiveness in developing countries. The developed managerial model is important as it identifies the determinants of a successful enterprise risk management realisation that will help the insurance companies in developing countries context to improve their strengths and maintain a sustainable growth.
Keywords: insurance sector; enterprise risk management; model development; developing countries; qualitative study; risk management; Palestine.
Exploring risk management strategies in global business environments
by Laurie Turnbull, Abubaker Haddud
Abstract: The purpose of this research was to determine if global organisations adopt formal risk management strategies to minimise risks and liabilities associated with international trade, and if a relationship exists between adopting a risk management strategy, and the number of countries that global organisations do business with. It is crucial for global organisations to improve competitive advantages by adopting risk management strategies that minimise misunderstandings with customers and suppliers, and awareness for logistics service providers that opportunities may exist to strengthen customer relationships by providing knowledge management support in these areas. Through the use of a 22-question online survey, data was collected from 108 logistics and purchasing professionals with more than 2 years experience as decision-makers in global organisations. The results of this research identified that organisations with a formal risk management strategy are, more often, dealing with trading partners in one to five countries, and more than 20 countries. Based on the results from this research, it is recommended that organisations develop a formal risk management strategy that includes contracts of sale, appropriate use of Incoterms for containerised shipments, application of cargo insurance and selection of the governing body of law to minimise risks and liabilities in international trade. It is also recommended that organisations designate an employee responsible for risk management, and use the Chamber of Commerce as a resource for knowledge management.
Keywords: risk management; competitive advantage; global business environment; contract of sale; strategy.
Earthquake and resultant apocalypse of Shimla City
by Harkanchan Singh, Pradeep Siwach
Abstract: The vulnerability of cities largely depends on rising population, its unchecked constructional growth, and failure in lifeline infrastructure. Shimla City lying in the Western Himalayas, was founded by the British in the early nineteenth century. The region is seismically active, lies in Zone IV of India with Modified Mercalli Intensity Scale of VIII and peak ground acceleration of 4.0 metres per second squared. The objective of this conceptual and empirical research paper is to evaluate Shimlas earthquake vulnerability with regards to past and present scenarios of infrastructures within it, supported by local residents' perspective. The study sought out the awareness of seismicity among the residents of Shimla, their opinion and knowledge, related to earthquake resistant houses, lifeline structures, earthquake measures and trust in city authorities. The comparison between primary data and available secondary data is indicative of the high seismic vulnerability levels and concludes with suggestions for both authorities and residents of Shimla.
Keywords: vulnerability; earthquake; Himalayas; Shimla.
Analysing company-specific components of business risk in selected manufacturing firms in Indian corporate sector
by Krishna Singh, Debasish Sur
Abstract: The present paper attempts to analyse the company-specific components of business risk, such as liquidity risk, cost structure risk and capital productivity risk, of the selected Indian manufacturing sector during the period 1994-95 to 2013-14. The sample size of the study consists of 100 companies, which have been selected by taking the top five companies from each of the 20 selected industries. The business risk and its company-specific components associated with the selected companies have been measured by using Ginis coefficient of concentration. Principal component analysis has been applied in designing the business risk index (BRI) by taking into account the three company-specific components of business risk. A simple regression model has been adopted to investigate the effect of BRI on the return, measured in terms of return on capital employed of the selected industries.
Keywords: business risk; liquidity risk; capital structure risk; cost structure risk; business risk index; return on capital.
Self-assertion vs. multi-fusion in the field of disaster management R&D: the case of Korea
by Kyoo-Man Ha
Abstract: This study examines how the role of research and development (R&D) can be improved in the field of disaster management in Korea by comparing self-assertion and multi-fusion approaches. Literature review is the major methodology used. Using five variables, namely public institutions, the industry or the business sector, college laboratories, mass media, and international R&D, the two approaches are analysed, and in the process, the pentagon model is established. The studys key position is that Korea has to transform its current self-assertion approach to a multi-fusion approach in the near future by understanding and improving its R&D culture, and thus, integrate expert knowledge into the R&D system.
Keywords: R&D culture; integrated approach; public institutions; industry; mass media.
Reliability improvement and risk reduction through self-reinforcement
by Michael Todinov
Abstract: The method of self-reinforcement has been introduced as a domain-independent method for improving reliability and reducing risk. A key feature of self-reinforcement is that increasing the external/internal forces intensifies the systems response against these forces. As a result, the driving net force towards precipitating failure is reduced. In many cases, the self-reinforcement mechanisms achieve remarkable reliability increase at no extra cost. Two principal ways of self-reinforcement have been identified: reinforcement by capturing a proportional compensating factor and reinforcement by using feedback loops. Mechanisms of transforming forces and motion into self-reinforcing response have been introduced and demonstrated through appropriate examples. Mechanisms achieving self-reinforcement response by self-aligning, self-anchoring modified geometry have also been introduced. For the first time, the potential of positive feedback loops to achieve self-reinforcement and risk reduction is demonstrated. In this respect, it is shown that self-energising, fast growth and fast transition provided by positive feedback loops can be used with success for achieving reliability improvement.
Finally, a classification is proposed of methods and techniques for reliability improvement and risk reduction based on the method of self-reinforcement.
Keywords: domain-independent; reliability improvement; risk reduction; self-reinforcement; positive feedback loop.
The relation between cost-benefit analysis and risk acceptance in regulatory decision-making
by Eun Jeong Cha, Bruce Ellingwood
Abstract: Risk cannot be avoided completely in modern society. As a society develops, public concerns on reducing risks are elevated, resulting in legislation and executive orders to create agencies that regulate such risks. However, it has been noted that the cost efficiencies of federal regulations are not consistent either within or across regulatory agencies, suggesting a need to establish a solid framework to advance regulatory decision-making in the public interest. In this paper, we use cumulative prospect theory to investigate risk acceptance reflected in several US federal regulatory policies, specifically in their proposed regulations that address public safety and health issues. Attitudes toward risk are reflected in perceptions of likelihoods and consequences of hazardous events or exposure to hazardous materials. Twenty two regulations proposed are analysed. The relative standing of risk acceptance reflected in each regulation sheds light on the differences in risk acceptance attitudes.
Keywords: cost-benefit analysis; cumulative prospect theory; decision-making; regulations; risk acceptance; risk perception.
An evaluation framework for disaster risk management in Egypt
by Bahaa Elboshy, Mona Gamaleldin, Hany Ayad
Abstract: Natural hazards are likely to increase in frequency and magnitude for several reasons, such as climate change and urbanisation Consequently, the imminent disasters are expected to be more severe and destructive. Therefore, Disaster Risk Management (DRM) and related issues have recently come to the fore and become an essential need. Hyogo Framework for Action (HFA) noted the importance of ensuring that the disaster risk reduction (DRR) is considered a national and local priority, through the assessment and monitoring of the DRM system. The DRM assessment is a necessary step towards sustainable development within the institutional context. This paper aims at presenting an adequate method to evaluate the DRM system to form a comprehensive view of its strengths and weaknesses. In this regard, a framework is presented to assess the national DRM system through a quantitative method for evaluating the relevant efficiency criteria. These include cooperation and integration, management sustainability, regulatory quality, credibility and transparency, up-to-dateness, justification, and financial resources. In order to achieve that, a set of indicators is established through reviewing the previous studies and international initiatives, and these indicators are adapted to evaluate DRM criteria. Egypt is prone to various natural hazards such as floods, sea-level rise and earthquakes. Over the last decades, disaster implications have revealed a lack of proper DRM before, during and after the disasters. Furthermore, a number of international assessments have identified Egypt as a low ranking nation regarding its ability to implement an effective DRM. Egyptian DRM is evaluated using the proposed framework to identify the weaknesses associated with the current system and the challenges facing DRM in Egypt.
Keywords: disaster risk management; coping capacity; institutional vulnerability; natural hazards.
Sensitivity analysis of a risk classification model for food price volatility
by Rueben Laryea
Abstract: A sensitivity analysis to vary the weights of an accurate predictive classification
model to produce a mixed model for ranking countries on the risk of food price volatility is carried out in this paper. The classification model is a marginal utility function consisting of multiple criteria. The aim of the sensitivity analysis is to derive a mixed model to be used in the ranking of country alternatives to aid in policy formulation. Since in real-life situations the data that goes into decision making could be subjected to possibilities of data alteration over time, it is essential to vary the weights of the criteria to introduce imprecision and to generate relative values of the criteria guided by the accurate weights of the classification model. The decision maker is provided with the flexibility to vary the weights of the criteria with a scale permitting the use of both subjective and objective information to generate relative values of the weights for the criteria by means of a pairwise comparison method together with a fixed point and judgment analysis from the scale to form a mixed model. The mixed model is used in the paper to work out a ranking of the alternatives, which consists of the countries in the decision making process, together with relative data values for the country alternatives. The relative data values of the country alternatives represent
the risk values on price volatility of the countries in relation to the risk values of other countries. The mixed model can be used to rank future relative alternative value datasets for policy formulation.
Keywords: decision makers; relative values; risk; ranking; imprecision; uncertainty; scale.