International Journal of Risk Assessment and Management (23 papers in press)
Investigating risks in the delivery of water and wastewater infrastructure projects in Australia
by Siva Kumar, Konstantinos Kirytopoulos
Abstract: Projects related to the development of public assets usually face uncertain and changing conditions and are continuously subjected to risk and uncertainty. Wastewater and water facilities, as typical examples of public assets, face such issues and the organisations involved with their delivery need to explore how to increase efficiency. This research investigates risk regarding wastewater and water projects in the Australian context. The research follows a mixed methods approach employing a literature review, focus group, anonymous questionnaire survey and investigation of specific cases. Forty-one relevant risks were identified, classified in terms of nature, lifecycle and ownership and ranked according to the relative importance index. Two case studies were used for validating the findings. The results obtained expand the body of knowledge by providing knowledge regarding key risks in the area, which can be used to offer practitioners support regarding effective risk management.
Keywords: infrastructure; water facilities; public assets; wastewater.
On the use of analytical inequalities for improving reliability and reducing risk
by Michael Todinov
Abstract: The paper demonstrates for the first time a new domain-independent method for improving reliability and reducing risk based on two fundamental approaches of using algebraic inequalities: the forward approach, based on deriving algebraic inequalities from real systems and processes, and the inverse approach, based on deriving new knowledge by meaningful interpretation of existing correct algebraic inequalities. The forward approach has been used to prove the domain-independent principle of the well-ordered systems which are characterised by the smallest possible risk of failure. In this respect, the paper answers an important question for a parallel-series system about the components that need to be subjected to condition monitoring so that the reliability of the system is maximised. The forward approach has also been used for optimal assignment of manufacturers to products with the purpose of minimising the overall percentage of defective products. The inverse approach has been used to generate new knowledge related to the relationship of the equivalent elastic constants of elements arranged in series and parallel and the upper and lower bounds of the percentage of faulty components in a batch of components obtained from pooling batches of components with unknown sizes. The paper also demonstrates the principle of non-contradiction: if the variables and the different parts of a correct abstract inequality can be interpreted as a system or process, in the real world, the system or process must exhibit properties that are consistent with the abstract inequality.
Keywords: analytical inequality; meaningful interpretation; forward approach; inverse approach; principle of non-contradiction; reliability; risk; reliability improvement; risk reduction.
Scenario-based stochastic model for supplier selection and order allocation under disruption risk and quantity discount
by Faiza Hamdi, Faouzi Masmoudi
Abstract: In this paper, we develop two stochastic mixed integers linear programs (SMILP) for supplier selection under disruption risk considering different capacities, failure probabilities, uncertain demand and quantity discounts. The suppliers are assumed domestic suppliers and global suppliers. The obtained combinatorial stochastic optimisation problem is formulated as a mixed integer program with conditional value-at-risk technique (CVaR). Numerical examples and computational results are presented. The proposed models can optimise the present problem through an estimated value at risk (VaR) and minimised CVaR simultaneously. The computational results reveal that the proposed models allow the decision maker to make an efficient selection of suppliers under disruption risk. Results also show that the decisions are not univocal because they depend on the risk proneness of the decision maker.
Keywords: supplier selection; disruption risk; stochastic mixed integer linear programming; total quantity discount; conditional value at risk; aversion risk.
Factors affecting crash risk within the car-sharing market
by Kristina Sutiene, Monika Uselyte
Abstract: As the sharing economy becomes increasingly more popular, crash risk assessment has become important, not only for insurance companies but also for companies engaged in the car-sharing business. As such, linear regression and machine learning methods, such as regression trees and random forests, were used to model crash risk based on the observations retrieved from car-sharing systems. The evidence shows that the average daily trip duration, the month of the crash event, and the car brand have the greatest impact on crash rates, while holiday, working day or weekend; peak hour; and gender of the driver hold no valuable information for predicting crash risk. After a proper assessment of the risk indicators that have the greatest impact on the occurrence of crashes, companies might be able to enter into personalised car-sharing pricing by developing usage-based or pay-as-you-drive insurance products.
Keywords: car-sharing; risk assessment; personalised pricing; insurance; usage-based insurance; crash risk; context-sensitive data; regression model; random forest; regression tree; prediction; machine learning; InsurTech.
METHODOLOGY SUPPORT AND ALGORITHMS FOR DYNAMIC SYNTHESIS OF TECHNOLOGIES AND PROGRAMS FOR PROACTIVE MANAGEMENT OF INFORMATION PROCESSES IN THE INDUSTRIAL INTERNET UNDER A CRISIS
by Boris Sokolov, Semyon Potryasaev, Olga Korableva, Valerii Zakharov
Abstract: The impact of digitalization on disruption risk control in the cyber-physical systems (CPS) functioning is studied. The article is devoted to methodological support and algorithms for the dynamic synthesis of technologies and control programs of information processes in the Industrial Internet of Things (IIoT) under a crisis. Generalized examples of the considered approach implementation in the field of integrated planning of CPS functioning and evaluating the robustness of synthesized programs are given
Keywords: IIoT; robust planning; integrated modelling; integrated planning.
A conceptual framework for cooperative risk management in seaports
by Ayman Nagi, Meike Schroeder, Wolfgang Kersten
Abstract: This study aims to develop a conceptual framework to guide the future research and development of a prescriptive process model for cooperative risk management in seaports (CoRiMaS). An empirical interview study based on 15 semi-structured interviews carried out in the Port of Hamburg served as input for the framework development. The empirical study is also supported by theories extracted from risk management, process management, knowledge management, and network science. The conceptual framework provides an overview of the required aspects to facilitate efficient cooperation in risk management, such as the definition of clear steps and guidelines for the proactive and reactive risk management process. According to the authors knowledge, this study presents the first conceptual framework that provides sufficient practical means to facilitate CoRiMaS and guide future research in this field.
Keywords: risk management; seaports; conceptual framework; cooperation.
A unified fuzzy system for evaluating work-related postural risk score of discomfort-prone body parts of workers through rapid upper limb assessment
by Bappaditya Ghosh, Subhashis Sahu, Debasish Majumder, Animesh Biswas
Abstract: A unified fuzzy system has been developed in this paper for assessing weighted postural risk scores of body parts by reducing errors relating to human perception in measuring exact body joint angles corresponding to different working postures used as inputs of rapid upper limb assessment (RULA) process. In the proposed method, a Mamdani fuzzy inference system is generated using two input parameters based on a modified Nordic questionnaire and RULA. Fuzzy analytic hierarchy process is incorporated to calculate the weight of postural risk associated with each body part, using the body part discomfort scale. Finally, the weighted postural risk score of each body part is evaluated to identify the discomfort-prone body parts for taking preventive strategies well in advance. To establish application potentiality of the proposed methodology, a case study is performed for assessing the weighted postural risk score of different discomfort-prone body parts of female brick moulders engaged in several brick fields.
Keywords: modified Nordic questionnaire; Mamdani fuzzy inference system; RULA; analytic hierarchy process; BPD scale.
Risk management in Islamic banks: a thematic synthesis and bibliometric analysis
by Umar Mohammed Tela, Zubir Azhar, Nurhafiza Abdul Kader Malim
Abstract: This paper aims to synthesise the literature and present a bibliometric analysis of risk management in the Islamic banking industry. Using thematic and bibliometric approaches, it analyses the yearly trends, publication types, subject areas, productive journals, active institutions, and countries found in the Scopus database to evaluate risks in Islamic banking. In this review, several types of risk were identified and related to risk exposure in the Islamic banking context. Six main themes representing risk classifications associated with risk exposure emerged from the thematic synthesis. Meanwhile, the bibliometric analysis highlights recent developments and trends, as well as the leading contributing institutions and countries and the influential journals in the research area of risk management in the Islamic banking sector. This review provides useful insights into the pattern of risks surrounding Islamic banks by leveraging the relevant literature on the subject area of risk management with a bibliometric analysis.
Keywords: risk management; banking industry; Islamic banks; Shari’ah compliance.
World experiences of agricultural risk management
by João Batista Ferreira, Luiz Gonzaga Castro Junior, Adedayo Adekunle, Nadeem Juman Shah Syed, Syden Reach
Abstract: This article aims to describe the main strategies, programs, and public policies for agricultural risk management. It is descriptive research, qualitative meta-synthesis, and systematic review to seek relevant information about the thematic. The results showed that having sufficient resources for the production process without the need to resort to bank financing is a strategy adopted by producers. Insurance is essential for risk mitigation; and agricultural derivatives play an important role in risk management involving the marketing of products, either in the purchase of inputs or in the sale of production. Public policy is essentials for farmers, especially low-income and fewer knowledge farmers, to have access to risk-mitigating instruments. The dissemination of knowledge about agricultural derivatives too is important. However, becoming practice the use of agricultural derivatives is still a matter to be worked on.
Keywords: agricultural risk management; market risk; production risk; risks of the business environment; hedge strategy; futures market; options market; insurance.
Special Issue on: MA SR – 2020 Modelling and Analysis of Safety and Risk in Complex Systems
Methodology for supporting and making decisions on equipping the onboard equipment of a small spacecraft's motion control system
by Alexander Pavlov, Valentin Vorotyagin, Dmitriy Pavlov, Alexander Kulakov
Abstract: This article offers an original method of decision support for choosing the composition of onboard equipment (configuration) motion control systems (MCS) of a small spacecraft with a given layout scheme. The method is based on the algorithm of multi-criteria (Pareto) narrowing of the set of acceptable MCS implementation and the principle of interactive interaction with the decision-maker at the stage of system design, which potentially improves the quality and efficiency of the application of space systems being created.
Keywords: small spacecraft; motion control system; reliability; survivability; design.
Integrated approach for risk assessment of alternative investments
by Andrii Kaminskyi, Denys Butylo, Maryna Nehrey
Abstract: Alternative investments play a significant role in creating portfolios for institutional and individual investors. Investing directly in such investments or jointly with traditional investments generates specific tasks for the risk assessment. One of the possible ways to consider such specificity is integrated risk assessment. Integrated treatment of risk assessment based on eight conceptual approaches is proposed in the article. Approaches involve risk estimation through volatility, losses in negative situations, asymmetry consideration, sensitivity, interdependency, and coupling risk and return. Additionally, risk assessment was considered in the framework of long-term memory in timeline series of returns and liquidity risk. Fourteen different indicators were chosen for risk estimation in vector form. The developed integrated treatment was applied for a representative sample of alternative investment presented by ETFs (Exchange Trade Funds). A total of 83 ETFs from 10 different types of alternative investment were estimated. Cluster analysis tools were applied to obtained outcomes. Risk attitude was taken into consideration. As a result, the clustering of alternative investments led to five clusters that differ in risk assessments. Na
Keywords: risk assessments; alternative investments; traditional investments; exchange trade funds; clustering; portfolio management.
How to reduce the risks of crowdfunding as an innovative mechanism of financing investment projects
by Maria Bakumenko, Anatoliy Sigal
Abstract: The mechanism of crowdfunding can provide project participants with a number of significant advantages. The technology of crowdfunding is good for economic processes in a country. Crowdfunding as an innovative mechanism of financing investment projects in the real economy may pose specific risks. While implementing any investment project, risk should be managed from the perspective of a comprehensive approach. The postulates of a new research area, Event-Related Management of Safety and Quality in Economics, are applicable to investment projects implemented in the real economy. Upgrading the quality of justification of an investment project, presented on a specialised crowdfunding web platform, will make the project safer for all the participants of the crowdfunding transaction and, correspondingly, will lead to a reduced risk level. It is worth designing a software module (information system) for specialised crowdfunding web platforms, to evaluate the efficiency of investment projects.
Keywords: crowdfunding; financing mechanism; investment project; real economy; risk; event-related management; safety; quality; crowdfunding platform; project efficiency.
Improving the quality of corporate information systems development based on a risk-oriented approach
by Anatoly Yastrebov
Abstract: In relation to improving the quality of corporate information systems development, we consider risk management methods based on the testing of software systems, using automatic production controls, and ensuring the production accuracy of product manufacturing. Development models and the set of inherent risks are presented. A comprehensive risk assessment indicator is proposed that takes into account the probability and consequences of their occurrence. It is shown that to assess the degree of destabilisation of production, it is advisable to use a point scale of risks.
Keywords: risk-oriented approach; quality; corporate information systems; development models; testing; software systems; production control; manufacturing accuracy; comprehensive indicator; risk assessment; risk scale.
Methodology and hardware-software complex for diagnosing diesel generator units of nuclear power plants
by Elena Abidova, Alexander Chernov, Artem Dembitsky
Abstract: This paper considers the task of improving the reliability of standby diesel generator sets of nuclear power plants (NPP) of the Russian Federation. A solution to the problem using a portable software and hardware diagnostic complex (I&C complex) that provides registration, processing, analysis and storage of data is proposed. The article describes in detail the main provisions of the methodology to monitor the state of the object. A method of analysing the state of a diesel generator unit (DGU) based on representing an array of vibration and ultrasound parameters in the space of the main components is used. The results of I&C complex tests for the diagnostics of an NPP DGU are presented. An assessment of the resource of equipment is proposed, based on the results of diagnostics for risk management, improving equipment reliability and cost savings.
Keywords: backup power sources; safety risk management; vibration diagnostics; diagnostics of diesel generators; heat monitoring; ultrasonic parameters; indicator charts.
Rule-based design using clustering for knowledge acquisition
by Peter Grabusts
Abstract: Data analysis can be done by expert system decisions on system status according to system input and output data. For the purpose of data analysis, there is often a need to classify data or to find regularities therein. The results of the regularity search can be expressed by the IF-THEN production rules. The use of different approaches - with clustering algorithms, neural networks - makes it possible to obtain rules that characterise data. It allows data to be interpreted, to find regularities therein, and to derive new rules that characterise them, enabling decision-making on their applicability in different risk assessment situations. Knowledge acquisition in this paper is the process of extracting knowledge from numerical data in form of rules. Rules acquisition in this context is based on clustering methods. With the help of the K-means clustering algorithm, rules are derived from trained neural networks. The rule-making methodology is demonstrated on a sample basis of IRIS data. The effectiveness of the obtained rules is evaluated. The clustering and rule-making methodology can be widely used in the evaluation of various economic and financial processes, in risk analysis, in risk management, and in making decisions about the usefulness and applying of acquired rules.
Keywords: data analysis; decision making; clustering algorithms; K-means; neural networks; risk analysis; system modelling; rule acquisition; rule base.
Investigating the influential key safety climate factors on safety behaviour in the construction industry: a systematic review of the literature
by Chaher Zid, Narimah Kasim, Abdelbaki Laidoune, Mohammed Mouda
Abstract: The impact of safety climate factors on the safety performance has been seldom inspected in construction industry, despite the fact that the significance of safety climate factors in human mistakes has been recognised. Basically, distinguishing the significant contributing factors influencing the safety behaviour should be the initial step towards the examination at the workplace. Therefore, this current study is aiming to investigate all safety climate factors that affect the safety behaviour, and from that the key influential safety climate factors are deduced accordingly. These results can be used as an integral feature of safety intervention after quantifying the safety climate factors. The implications of these findings will significantly reduce at-risk work behaviours and increase the safety performance. The safety climate factors are identified and categorised by using the systematic analysis. The final outcome concluded the critical features of key safety climate factors that can be implemented in particular applications in order to handle work behaviours. These key factors include safety attitude, management commitment, safety management system and employee involvement. The critical factors that were identified from the systematic analysis in the literature review can influence at different levels within any organisation towards the safety behaviour and can empower the assurance of influence disparity of all safety climate factor dimensions.
Keywords: safety climate factors; work safety behaviour; construction industry; key influential factors.
On the black swan risk dynamical evaluation
by Sergei Zuev, Petr Kabalyants
Abstract: The paper was inspired by comprehensive researches in field of video data information security. A long range of frames which forms video contains surprise events sometimes. Those events may cause big consequences not only in video, but also in real life. The main goal of this work is to figure out how incidents that have already happened affect upcoming incident probability. In accordance to the Nassim Taleb approach, the hidden system parameters are taken into account. However, the main idea in the paper is some kind of cumulative nature of the incidents. This proposition is grounded in the foundation of the probability distribution and the risk evaluation technique proposed in the article. The starting point was the simplest Bernoulli sequence. Then the special defined finite series inside the sequence are considered as an incident. In order to determine the forthcoming incident probability distribution, a statistical ensemble of the relevant systems is considered. It is possible to evaluate an incident probability for a system from the ensemble even if there were no incidents registered in the system yet. It is shown in the present article that the probability can be evaluated dynamically if there is enough data about previous incidents in the ensemble.
Keywords: black swan; risk evaluation; dynamical risk evaluation; Weibull distribution; computer-aided risk evaluation; information risk assessment.
Process-event method for operational risk assessment for enterprises
by Ekaterina Karaseva
Abstract: This paper proposes the process-event method for quantitative assessment of operational risk in dynamics and calculation of the required economic capital volume. The method is a further development of the traditional process approach to enterprise risk management. The main idea is to describe the process as a chain of random events instead of a graphical description of the process as notations. The ontology of the method includes basic definitions, mathematical foundation and method for calculation of the current and integrated operational risk values and the economic capital volume, with upper and lower limits of the reservation. The integrated value of the enterprise's operational risk can be used as a rating indicating reliability of the enterprise. A timeline diagram (process-event diagram) of the event flow is introduced, and its features in comparison with PERT and Gantt charts are described.
Keywords: process; event; logic; probability; operational risk; enterprise; management; event flow; event chain; PERT; Gantt chart; assessment; analysis.
Intelligent computer software system for optimizing the adaptive control of investment projecting based on deterministic and stochastic network formalisation
by Andrey Shorikov, Elena Butsenko
Abstract: The article discusses the development and creation of an intelligent computer system for optimising the control of investment projecting processes under conditions of uncertainty. This system is designed to automate the modelling of investment projecting processes and optimise the adaptive control of decision-making in their implementation based on network economic and mathematical modelling, as well as methods and tools for the development of intelligent software systems. The basis of the system is the use of a new method of network formalisation and optimisation of adaptive project control in the form of an appropriate methodology for solving the investment projecting problems under consideration. The proposed method also contains a part that implements a neural network stochastic model of adaptive control in the presence of risks. The paper describes the main blocks of the developed intelligent computer software system and its capabilities, and presents the results of evaluating the effectiveness of its application.
Keywords: intelligent software system; optimisation of adaptive control; investment projecting; economic and mathematical modelling; network planning and control methods; investment optimisation; control strategy; schedule; risks; entropy; probability.
Method for assessing reliability of electric power systems of a structural compklex organisation
by Elena Sukach, Yuriy Zherdetsky, Maxim Buzhan, Aleksey Konchits
Abstract: We consider a method for assessing the probabilistic characteristics of the reliability of structurally complex electric power systems of large dimensions, formalised in the form of n-poles, based on the mathematical apparatus of the probabilistic-algebraic simulation, which provides the calculation of the reliability of electric power systems operating under the influence of random factors. The results of testing the software that is used to assess the reliability of a fragment of the electric power system are presented in the article.
Keywords: reliability; electric power system; n-poles; software package; probabilistic-algebraic simulation; structural complex system.
Event-driven management of the quality of economics and the state 'from below'
by Eugene Solozhentsev
Abstract: The scientific problem 'Event-driven management of the quality of economics and the state 'from below' is formulated on the basis of artificial intelligence, algebra of logic and logical-probabilistic calculus. In contrast to the traditional approach to assessing the quality of life in a country, region or company, the approach and methodology for assessing the quality of life of one person is considered. Managing the quality of human life is represented by managing the processes of his treatment, education, and decision-making. Events in these processes and the corresponding logical variables relate to the behaviour of humans, others, and infrastructure. The processes of a person's quality of life are modelled, analysed and controlled with the participation of the person himself. The article illustrates this problem only by the examples of one government and one economics. Scenarios and structural, logical and probabilistic models for managing the quality of human life are presented. The paper escribes specific software for quality management. The relationship between the management of the quality of human life and digital economics is considered. The role of public opinion in management 'from below' is considered on the basis of generalisation of many studies on the management of the economics and the state. Bottom management is also feedback from top management.
Keywords: management 'from below'; economics; state; quality of human life; public opinion; artificial intelligence; event-driven management.
Lenders' liability and ultra-hazardous activities
by Gerard Mondello
Abstract: The amendments made to CERCLA in 1996 reinforced the exemption of lenders that finance ultra-hazardous activities. Then, they become involved in liability only if they manage or own polluting activities. The paper compares strict liability and negligence rule in an agency model of vicarious liability type, and proposes to restore lenders as principals by applying negligence rules to them while operators would resort to a strict liability rule. This scheme leads the lender to propose to the borrower the most favorable loan level that induces the latter to provide the socially optimal security level.
Keywords: strict liability; negligence rule; moral hazard; judgement-proof; lenders; risky activities.
Distributional time series for forecasting and risk assessment
by Boris Dobronets, Olga Popova, Alexei Merko
Abstract: Important computational aspects of big data processing and forecasting methods for the problems of the risk assessment are under consideration. A new approach to the study and forecasting of big data represented by time series is discussed. Our approach is based on big data technologies, including data aggregation procedures for input and output parameters and computational probabilistic analysis. The result of this approach is a new type of representation of a big time series in the form of distributional time series. Piecewise polynomial models are used for data aggregation procedures. To solve computational problems on distributed time series, we developed arithmetic over piecewise polynomial functions. To demonstrate our approach, we studied the problem of risk assessment for investment projects.
Keywords: distributional time series; aggregation; computational probabilistic analysis; forecasting; risk assessment.