Risk Analysis under a Circular Economy Context Using a Systems Thinking Approach

Abstract

Applying the circular economy (CE) concept is crucial for achieving sustainable development goals. A transition towards a CE requires new tools to clarify the interdependency among systems and assist policy-makers in their decisions, particularly in the risk assessment field. This paper analyzes the systemic effects and interdependencies of several risks in the context of a CE. The developed tool helps adopt proactive strategies that consider the four aspects of sustainability (economic, environmental, social, and technological). The adopted tool improves strategic thinking for a circular economy concept and supports organizations with respect to assessing risks. This paper aims to provide a comprehensive and novel model to quantify the priority weights of the sustainability risk indicators to provide guidelines for supporting the policy formulation process for decision-makers. In this paper, the taxonomy of various risk indicators has been proposed, and we have identified and adopted 40 risk indicators for the CE. This paper focuses on understanding how risks can be constructed and how they affect the performance of power plants over time in terms of availability, efficiency, and operational and maintenance cost. The causal loop diagram (CLD) model is built by deploying various risk quantifications, and the adopted tool was tested and validated to assess the CE risks relevant to the environmental perspective in power plants in the Middle East. The risk indicators under the concept of the CE model and the system thinking approach can help policy-makers in their strategic and operational decision-making process for achieving a better understanding of the risk assessment process. The taxonomy of risk categories and its linking with the system thinking approach will help in the successful and effective implementation of a CE in the energy sector in the long-term. The proposed model offers a tool for policy-makers to design policies when planning a CE.