Practical Risk Analysis Research Articles

Risk analysis for the supplier selection problem using failure modes and effects analysis (FMEA)

While seeking for global suppliers is a general trend for lower cost and better quality, it is not trivial for a company to assess the corresponding risks in supplier selection. This paper proposes the supplier selection method that applies failures modes and effects analysis (FMEA) to assess the risks in the decision process. As each supplier is evaluated under the common multi-criteria framework, risks are viewed as the possible deviations from expected performance, and they are interpreted as failure modes in risk analysis. Following the concepts of FMEA, each failure mode is examined with respect to the possible causes and effects. This method generates two technical deliverables for supporting risk analysis. Firstly, the FMEA document is developed to support the team's discussion of supplier risks and accumulate the risk knowledge within the company. Secondly, the ranking numbers based on FMEA (i.e., risk priority numbers) are utilized to evaluate a discount on a supplier's performance according to their risk level. A real-case example about selecting methanol suppliers in the global market is used to demonstrate the proposed method for risk analysis in practice.

A contractor's classification of owner payment practices

PurposeA common distraction to contractors is that of cash management, and particularly incoming payments. In the extreme, a failure to manage a project's cash flows may bring about business failure. A contractor's financial viability rests on how actual payments from an owner are received. The purpose of this paper is to present a method for contractors to evaluate the punctuality and fullness of owner payments based on historical behaviour.Design/methodology/approachOwners are classified according to their late and incomplete payment practices. The payment profile of an owner, in the form of aging payments received based on claims, is used as a basis for the method's development. Regression trees are constructed based on three predictor variables, namely, the average time to payment following a claim, the total amount ending up being paid within a certain period and the level of variability in claim response times.FindingsThe method will be of interest to contractors concerned with managing their cash positions, as well as those persons looking at contractor‐owner relationships.Practical implicationsThe method is intended to be used internally within a contractor's organisation to assist in decision making. The method can also be used by subcontractors, suppliers, and consultants. Owners may use the method reflectively to improve their own practices, to save time and cost by reducing disputes, and to develop better owner‐contractor relationships.Originality/valueThis paper represents an original approach, and an original contribution to contractor pre‐tendering risk analysis practices, and an extension to contractor claim‐payment analysis.

Characterization of Nuclear and Chloroplast Microsatellite Markers for <i>Falcaria vulgaris</i> (Apiaceae)

Falcaria vulgaris (sickleweed) is native to Eurasia and a potential invasive plant of the United States. No molecular markers have been developed so far for sickleweed. Characterization of molecular markers for this plant would allow investigation into its population structure and biogeography thereby yielding insights into risk analysis and effective management practices of the plant. In order to characterize the molecular markers, DNA samples were collected from eight populations in Iowa, Nebraska and South Dakota. Nuclear microsatellite markers developed for other Apiaceae taxa were screened and tested for intergeneric transferability to sickleweed. The chloroplast trnL intron and trnL-F intergenic spacer regions were sequenced and the sequences were used to design primers to amplify the microsatellites present within each region. We characterized eight polymorphic microsatellite markers for sickleweed that included six nuclear and two chloroplast markers. Our result showed intergeneric transferability of six nuclear microsatellite markers from Daucus carota to F. vulgaris. The markers we characterized are useful for population genetic study of F. vulgaris.

Risk management practices of conventional and Islamic banks in Bahrain

PurposeThe purpose of this paper is to report empirical evidence regarding the risk management practices of banks operating in Bahrain.Design/methodology/approachA sample of bankers was surveyed through a questionnaire and the results used to examine if the risk management practices are significantly associated with the type of bank (conventional or Islamic) and if those practices are positively affected by understanding risk, risk management, risk identification, risk assessment analysis, risk monitoring and credit risk analysis. Several statistical and econometric methods were used to the test the hypotheses.FindingsBanks in Bahrain are found to have a clear understanding of risk and risk management, and have efficient risk identification, risk assessment analysis, risk monitoring, credit risk analysis and risk management practices. In addition, credit, liquidity and operational risk are found to be the most important risks facing both conventional and Islamic banks. Furthermore, the risk management practices are determined by the extent to which managers understand risk and risk management, efficient risk identification, risk assessment analysis, risk monitoring and credit risk analysis. Islamic banks are found to be significantly different from their conventional counterparts in understanding risk and risk management. The levels of risks faced by Islamic banks are found to be significantly higher than those faced by conventional banks. Similarly, country, liquidity, and operational, residual, and settlement risks are found to be higher in Islamic banks than in conventional banks.Research limitations/implicationsThe results may have been influenced by the current economic global crisis. Although the response rate is very high, there is no evidence of non‐response bias, and there is high internal consistency within the responses. The reliance on survey methodology introduces the possibility that respondents expressed their beliefs and did not necessarily describe their actions.Practical implicationsBankers, depositors, investors and regulators are likely to benefit from the results of the study when taking decisions related to the banking industry.Originality/valueThis is the first published attempt to investigate empirically the risk management practices of banks operating in Bahrain and to compare the practices of conventional and Islamic banks.

Risk and vulnerability analysis in practice: evaluation of analyses conducted in Swedish municipalities

Risk and vulnerability analysis (RVA) can benefit the process of preventing and preparing for disasters, both by generating a basis for making decisions and by enhancing risk awareness, safety culture and response capacity through the RVA process itself. In studying and understanding the practices related to RVA, insights can be gained regarding ways in which the RVA can be improved in society, as well as into how methods for RVA can be designed to suit the particular context. However, studies of this sort are rare. This paper presents an evaluation of RVA performed by Swedish municipalities, which are important actors in the Swedish emergency management system. This is done by employing a systematic, design science approach outlined in the paper. Document studies and interviews were used to collect data on the analyses performed by the municipalities, and the evaluation shows that there is room for improvement. The results can be especially relevant for municipalities developing their RVA practices, as well as for other actors performing similar types of analyses.

On the critique of Beck’s view on risk and risk analysis

Ulrich Beck’s stand on risk and risk analysis has been challenged by many researchers. In this paper we look closer into some of the arguments used, with a main focus on the fundamental analysis carried out by Campbell and Currie. These two authors argue that Beck’s criticisms of the theory and practice of risk analysis are groundless: Beck’s understanding of what risk is, is badly flawed, and he misunderstands and distorts the use of probability in risk analysis. However, the analysis of Campbell and Currie is based on a set of premises, for example that risk is a function of probability and harm, and that risk really exists and one can be wrong about risk. Although such ideas are common, they can be challenged, and in the literature a number of alternative perspectives have been suggested. The purpose of the present paper is to study Beck’s stand on risk analysis and the related critique of Campbell and Currie and others, in view of some of these alternative perspectives on risk. To what extent is the critique then justified? The paper concludes that the case raised against Beck’s view is still strong and relevant, but has to be nuanced with respect to some important issues, for example concerning the distinction between belief and truth when it comes to risk. Allowing for spacious interpretations of some of Beck’s theses, the paper provides strengthened support for Beck’s view on these points.

Towards the Development of Regional Risk Profiles and Adaptation Measures for Sea Level Rise

Risks from future sea level rise entail significant uncertainties concerning overall potential impacts, the specific threats faced by particular areas and what benefit or costs are associated with strategies for addressing such risks. The proposed risk quantification and management framework is consistent with quantitative risk analysis practices in order to enable decision making in a multi-hazard framework. Quantifying risk enables the examination of adaptation measures requiring basic physical inputs that can underpin viable engineering solutions for sustaining coastal infrastructure.

Bombs, bodies, and biopolitics: securitizing the subject at the airport security checkpoint

The United States Transportation Security Administration (TSA) broadcasts the following warning in airports around the country: ‘Making jokes or statements regarding bombs and/or threats during the screening process may be grounds for both civil and criminal penalties and could cause you to miss your flight.’ Despite the warning, people continue to be arrested for making jokes about bombs, anthrax, and security policy. This paper examines the persistence of these disciplinary mechanisms in the context of the deterritorialized risk analysis, biometric identity banking, and ‘network thinking’ that characterize state security regimes. The article first describes how TSA has incorporated theories of complex adaptive systems, networks, and emergence into its strategy. Second, I trace how air travelers move through a series of risk analysis and inspection practices. By combining passenger pre-screening, check-in, visual inspection and ‘behavior observation,’ TSA seeks to surveil different spatiotemporal slices of passengers' identities, belongings, and future plans. Third, the article situates the banning of the bomb joke in the context of information-driven inspection practices and unpacks the interpretive practices of TSA staff. Finally, I argue that spatial orders are produced in and through the embodied performance of speech, and further, that disciplining speech points to enduring anxieties about the ‘securitized subject’ in post-9/11 security regimes.

Il Risk Management nei progetti di investimento attraverso la Multi Criteria Decision Analysis

Usually, we consider Multi Criteria Decision Analysis (MCDA) as a deterministic approach to support complex decisions, which involve multidisciplinary profiles. Furthermore, risk analysis is considered as an integral part of investments analysis, also in a probabilistic version. In this work, we are going to explore the applicability of probabilistic MCDA in supporting risk analysis practices (as a part of project management activities), in economic feasibility evaluation of the real estate investment projects. It is assumed a management approach based on adaptive approach instead of optimization approach; to operate in context characterized by the presence of risk/uncertainty components; that these components are able to perturb decision processes and strategic choices, conditioned by subjectivity/uncertainty of stakeholders and institutions in judgement definition phase (decision maker’s utility functions, criterion scores, ranking of alternatives, etc.).

Application of quantified risk analysis in landslide risk management practice: Hong Kong experience

Landslides are a common form of natural hazard in Hong Kong that can cause significant loss of life and socio-economical consequences. Since the mid-1990s, the Geotechnical Engineering Office has pioneered the novel development of Quantified Risk Analysis (QRA) for landslide risk management. This paper outlines the technical development work that has been undertaken to support the application of QRA. Case studies are presented to illustrate the role of QRA in providing insights to tackle a range of slope safety problems.

Improving Information Security Risk Analysis Practices for Small- and Medium-Sized Enterprises: A Research Agenda

An international association advancing the multidisciplinary study of informing systems. Founded in 1998, the Informing Science Institute (ISI) is a global community of academics shaping the future of informing science.

Banks' risk management: a comparison study of UAE national and foreign banks

PurposeThe purpose of this research is to examine the degree to which the UAE banks use risk management practices and techniques in dealing with different types of risk. The secondary objective is to compare risk management practices between the two sets of banks.Design/methodology/approachThe authors developed a modified questionnaire, divided into two parts. The first part covers six aspects: understanding risk and risk management; risk identification; risk assessment and analysis; risk monitoring; risk management practices; and credit risk analysis. This part includes 43 closed‐ended questions based on an interval scale. The second part consists of two closed‐ended questions based on an ordinal scale dealing with two topics: methods of risk identification, and risks facing the sample banks.FindingsThis study found that the three most important types of risk facing the UAE commercial banks are foreign exchange risk, followed by credit risk, then operating risk. It also found that the UAE banks are somewhat efficient in managing risk, and risk identification and risk assessment and analysis are the most influencing variables in risk management practices. Finally, the results indicate that there is a significant difference between the UAE national and foreign banks in the practice of risk assessment and analysis, and in risk monitoring and controlling.Originality/valueThe article will be of value to those interested in the banking industry.

Environmental risk analysis for accidental emissions

Environmental legislation and voluntary improvement activities at Finnish enterprises have led to a situation where attempts have been made to prevent accidental emissions resulting from abnormal and unexpected events at industrial sites by using environmental risk analysis. However, the consensus among companies and authorities was that there was no clear idea on what an environmental risk analysis should contain. A project with the aim of preparing a guideline for conducting environmental risk analysis according to good practises was commissioned. This article summarises the main contents of the guideline, focusing on the risk terminology and instructions about how to perform an environmental risk analysis in practice. The framework developed is strongly based on the risk analysis techniques and traditions of industrial safety. Environmental risk analysis consists of scope definition, risk identification, risk assessment and proposals for risk reduction and mitigation actions. A consequence matrix in association with a risk matrix is an important element of risk analysis, and supports the decision making from the viewpoint of risk tolerability and acceptance.

Identifying and evaluating risks related to enterprise dependencies: a practical goal-driven risk analysis framework

This paper suggests a framework for identifying the extent to which an organisation depends on services and resources provided by either external or internal technological infrastructures and for evaluating the corresponding business risks. By combining the advantages provided by a goal-driven organisation modelling technique with the analysis capabilities of an infrastructures simulator, the proposed framework provides a valuable managerial support for identifying, analysing, and eventually mitigating risks associated with enterprise dependencies. Its practical application is illustrated in a simplified context using e-government project data.

Securing IP telephony systems – best practices

Continuing our series on security VoIP, we look at best security practices for organizations deploying IP telephony in anger. Practices are graded as ‘desirable’, ‘optional’ etc. but one isn't: keeping the voice and data traffic separate through the use of 802.1Q VLANs. That's firmly in the ‘mandatory’ category. When securing network infrastructure, one technique is vital, according to the author: employ separate voice and data VLANs. This has several advantages. Amongst them, the inherent isolation provided by VLANs ensures that ‘inter-VLAN traffic’ is under management control and that network attached PCs cannot initiate a direct attack on voice components. When defining threats, it is imperative that there is a holistic approach to IT security, so that the voice system is included in overall security risk analysis and best practices are applied as deemed appropriate. These are aligned to data system security measures, as a minimum. In practical terms this would typically include deep packet inspection techniques, robust wireless security mechanisms, and endpoint security on servers and hosts. By definition VoIP traffic is vulnerable to the same threats as data traversing the IP network. The most common threats are from DoS attacks, malware and deliberate intrusion. We continue our VoIP series exploring how best to tackle them.

Benchmarking Risk Analysis Practice in the International Water Sector

Risk analysis in the water utility sector is fast becoming explicit. Here, we describe application of a capability model to benchmark the risk analysis maturity of a sub-sample of eight water utilities from the USA, the UK and Australia. Our analysis codifies risk analysis practice and offers practical guidance as to how utilities may more effectively employ their portfolio of risk analysis techniques for optimal, credible, and defensible decision making.

応用科学哲学の問題としてのリスク

The practice of risk analysis and its validity have invited heated controversies for many years. In this paper, I approach this issue from the point of view of "an applied philosophy of science". Two common models of risk analysis, i.e. the positivist and the social constructivist models, seem untenable because they reflect positions already refuted in the philosophy of science. Kristine Shrader-Frechette and Deborah Mayo offer alternative post-positivistic models of the risk analysis (scientific proceduralism and a metascientific analysis, respectively). Although I agree with them in many respects, their images of uncertainty in the risk analysis seem to be somewhat coarse-grained. I introduce a Bayesian point of view as a refinement in the post-positivistic model.

Embedding security practices in contemporary information systems development approaches

As information and communication technologies become a critical component of firms’ infrastructures and information establishes itself as a key business resource as well as driver, people start to realise that there is more than the functionality of the new information systems that is significant. Business or organisational transactions over new media require stability, one factor of which is information security. Information systems development practices have changed in line with the evolution of technology offerings as well as the nature of systems developed. Nevertheless, as this paper establishes, most contemporary development practices do not accommodate sufficiently security concerns. Beyond the literature evidence, reports on empirical study results indicating that practitioners deal with security issues by applying conventional risk analysis practices after the system is developed. Addresses the lack of a defined discipline for security concerns integration in systems development by using field study results recording development practices that are currently in use to illustrate their deficiencies, to point to required enhancements of practice and to propose a list of desired features that contemporary development practices should incorporate to address security concerns.

Risk analysis and evaluation of capital investment projects

In determining the feasibility of projects where capital investments are concerned, various methods are used. The focus of these methods is on return per se, so it is often asked to what extent any of these methods take the risk concept into account. The main objective of this study was to investigate the importance of risk with regard to capital investment projects. Secondly, with the aid of an empirical study, the study tried to establish whether risk is incorporated when South African companies evaluate capital investment projects. The empirical analysis indicated that risk analysis and evaluation in practice are to a large extent neglected by South African companies. It was found that nearly a quarter of companies estimate their annual cash flows using management subjective estimates alone.

The Incorporation of Risk in the Capital Budgeting Decision

In determining the feasibility of projects where capital investments are concerned, various methods are used. The focus of these methods is on return per se, so it is often asked to what extent any of these methods take the risk concept into account. The main objective of this study was to investigate the importance of risk with regard to capital investment projects. Secondly, with the aid of an empirical study, the study tried to establish whether risk is incorporated when South African companies evaluate capital investment projects. The empirical analysis indicated that risk analysis and evaluation in practice are to a large extent neglected by South African companies. It was found that nearly a quarter of companies estimate their annual cash flows using management subjective estimates alone. Smaller companies tend not to use any formal risk technique. Many South African companies do not make adjustments for the inflation rate when they assess the viability of a capital investment project. Although the majority of companies use various inflation rates for different annual cash flows, it was found that nearly a quarter of companies do not make adjustments for inflation.