Risk Management Solutions Research Articles

The Three Rs of Risk Management

Key TakeawaysReliability, robustness, and resilience are concepts that can raise the level of discourse and improve risk communications and risk management.Risk affects water utilities in various contexts, such as selection of long‐term strategies for capital investments or climate adaptation.The water industry needs risk management solutions that strive for reliability and robustness and are informed by the concept of resilience.

Guest Editors’ Note on the Summer 2019 Special Issue – New Solutions in Risk Management

Guest Editors’ Note on the Summer 2019 Special Issue – New Solutions in Risk Management

Risk Control in Modeling Financial Management Systems of Large Corporations in the Digital Economy

Purpose: Growth in the uncertain business environment leads to the formation of demand for new institutional and legal conditions for the financial and investment strategies. The article discusses features of risk-oriented control in the context of digitalization. Design/Methodology/Approach: The study involves modern concepts of uncertainty theory and risk management solutions coupled with the analysis of factors affecting the system risk formation and development. Findings: Authors have developed the features of a modern global economic system, influencing risk formation and development, highlighted the prospects for the digitization of business systems and concluded that in terms of digitization interactive interagency cooperation of the real economy development support is main and required element of the Russian economic system’s institutional matrix. Practical Implications: The research results may be implemented into financial management systems of large industrial corporations. Originality/Value: The main contribution of this study is the modern digitalization pattern affecting the financial systems‘ development.

Islamic venture capital – issues in practice

Purpose This paper aims to explore the structure and underlying contracts of Islamic venture capital (IVC) and to evaluate its prospects. VC can be perceived as an investment vehicle possessing most of the desirable attributes of a Sharīʿah-compliant investment vehicle. There are certain issues involved in the formation, operations and exit strategies of these investments that are discussed in detail in this paper. Design/methodology/approach A detailed review of relevant literature is performed to identify how IVC investments can be made and how related issues may be resolved. Findings IVC investment has potential of incorporating Sharīʿah-compliant investment modes. Additionally, it may offer higher than average returns. These attributes can be desirable for Islamic finance industry that is currently in need of equity-based financing products. The major causes of lesser growth of IVC investments are lack of awareness among the investors and the absence of viable investment opportunities for small- and medium-scale investors. IVC may attract general public if established after extensive research aimed at introducing innovative products. Originality/value This paper provides an overview of a truly Sharīʿah-compliant investment vehicle, furnishes a synthesis of various suggestions made by industry and academia and suggests viable solutions for valuation, risk management and exit strategies.

Application of statistical techniques to proportional loss data: Evaluating the predictive accuracy of physical vulnerability to hazardous hydro-meteorological events.

Knowledge about the cause of differential structural damages following the occurrence of hazardous hydro-meteorological events can inform more effective risk management and spatial planning solutions. While studies have been previously conducted to describe relationships between physical vulnerability and features about building properties, the immediate environment and event intensity proxies, several key challenges remain. In particular, observations, especially those associated with high magnitude events, and studies designed to evaluate a comprehensive range of predictive features are both limited. To build upon previous developments, we described a workflow to support the continued development and assessment of empirical, multivariate physical vulnerability functions based on predictive accuracy. Within this workflow, we evaluated several statistical approaches, namely generalized linear models and their more complex alternatives. A series of models were built 1) to explicitly consider the effects of dimension reduction, 2) to evaluate the inclusion of interaction effects between and among predictors, 3) to evaluate an ensemble prediction method for applications where data observations are sparse, 4) to describe how model results can inform about the relative importance of predictors to explain variance in expected damages and 5) to assess the predictive accuracy of the models based on prescribed metrics. The utility of the workflow was demonstrated on data with characteristics of what is commonly acquired in ex-post field assessments. The workflow and recommendations from this study aim to provide guidance to researchers and practitioners in the natural hazards community.

Risk of Human Pathogen Internalization in Leafy Vegetables During Lab-Scale Hydroponic Cultivation

Controlled environment agriculture (CEA) is a growing industry for the production of leafy vegetables and fresh produce in general. Moreover, CEA is a potentially desirable alternative production system, as well as a risk management solution for the food safety challenges within the fresh produce industry. Here, we will focus on hydroponic leafy vegetable production (including lettuce, spinach, microgreens, and herbs), which can be categorized into six types: (1) nutrient film technique (NFT), (2) deep water raft culture (DWC), (3) flood and drain, (4) continuous drip systems, (5) the wick method, and (6) aeroponics. The first five are the most commonly used in the production of leafy vegetables. Each of these systems may confer different risks and advantages in the production of leafy vegetables. This review aims to (i) address the differences in current hydroponic system designs with respect to human pathogen internalization risk, and (ii) identify the preventive control points for reducing risks related to pathogen contamination in leafy greens and related fresh produce products.

A MONTE CARLO SIMULATION METHOD FOR RISK MANAGEMENT IN ROAD PAVEMENT MAINTENANCE PROJECTS

Road pavement management and maintenance are responsible for a considerable amount of resources and energy consumption, with limited options to forecast due to the fact that projects have different sizes, are taking place in regions with various types of soil, landforms or types of distress. The objective of this paper is to offer a solution for risk management using Monte Carlo simulation by taking into consideration three key aspects for the management of any project: costs, time, quality and the most important road parameter, that may cause the failure of the project -type of road distress. As a module of PAV3M maintenance and management project, Risk3M application uses the Pavement Condition Index (PCI) and the Long-Term Pavement Performance Program (LTPP) in order to identify and classify risk based on the type of road distress, using a scale from 1 (very poor) to 5 (very good). The impact on costs (Rc), on risks depending on the time span (Rt) and on the overall quality of the project (Rq) where classified in a scale from 1 to 5. This paper uses Monte Carlo simulation procedures with evaluation of risk scales and type of road distress (PCI) and specifications of correlations between the simulated variables (Rc, Rt, Rq).

METHOD OF SMS BASIC ELEMENTS DEVELOPMENT FOR THE AERODROME OPERATOR

In developing and implementing the safety management System (SMS), which is mandatory in accordance with ICAO SARPs and the requirements of the air legislation of the Russian Federation, civil aviation aerodrome operators face methodological problems mainly in two components of the SMS – risk management and calculation of the safety performance indicators. To solve these problems, the article proposes to use a new approach for risk management in the airlines, developed by the Airline Risk Management Solution Group (ARMS). When adapting the method to the activities of the airport operator, the specifics of aviation events at the airport are taken into account. Manifestations of hazard factors in the form of events and deviations from the norms are proposed to be structured in accordance with the classification of activities in ground handling according to ISAGO Manual. A method for calculating and monitoring the safety performance indicator for the airport operator having extremely rare aviation events is proposed. The advantages of the ARMS approach in the implementation of the main prognostic part of the risk assessment, which directly considers the ability of the system to counteract the dangerous situation under the influence of hazards are shown. A threelevel scheme of safety management at the airport is proposed. The method proposed in the article was used as a basis for SMS implemented at two international aerodromes of the Russian Federation.

Shift-Work Fatigue in the Petroleum Industry: A Proactive Countermeasure Using Light Cues

This article, written by Special Publications Editor Adam Wilson, contains highlights of paper SPE 187048, “Shift-Work Fatigue in the Petroleum Industry: A Proactive Fatigue Countermeasure,” by Koos Meijer, KM Human Factors Engineering; Martin Robb, SPE, Human Factors Applications; and Jasper Smit, CGE Risk Management Solutions, prepared for the 2017 SPE Annual Technical Conference and Exhibition, San Antonio, Texas, USA, 9–11 October. The paper has not been peer reviewed. Insomnia is a common problem in offshore shift-work environments. In rotating shift-work environments, daylight and darkness cues are incongruent with sleep and work schedules. As a result, many shift workers find it hard to adapt to the schedule, resulting in suboptimal sleeping patterns and increased workforce fatigue. This paper presents a scientific method for reducing fatigue risks in oil and gas organizations that operate a slowly rotating shift schedule. Sleep and Fatigue in Offshore Shift-Work Environments Humans are diurnal (i.e., day animals); because of this, our circadian rhythm is programmed to ensure that alertness, concentration, and other aspects relating to job performance are highest during the day. Our circadian rhythm makes us feel sleepy in the evenings and ensures that we can maintain restorative sleep during the night. The bodily processes related to this are maintained in the suprachiasmatic nucleus (SCN), which is in the anterior hypothalamus in the brain and is synchronized with the day/night cycle. During the abrupt transition to an offshore night working schedule, the sleep and wake timings of our biorhythm become misaligned with those of the work schedule; this is referred to as circadian misalignment, a mismatch between our internal circadian clock and work, sleep, and eating activities. Circadian misalignment also takes place during travel, but, in the case of jet lag, the time-of-day cues at our destination—particularly daylight that contains blue short-wavelength light—enables our biorhythm to realign with the schedule. These time cues include A start-of-the-day cue in the form of bright blue (day) light in the morning A night cue in the form of the absence of this type of light, 3 hours before bedtime During offshore night shifts, these time cues are missing or completely reversed. As a result, some shift workers only partially adjust to the imposed shift-work schedule. These circadian- misaligned shift workers have to work when their body prepares for sleep and have to go to bed when their body tells them to stay active. Performance and Safety. Shift workers’ bodies are preparing for sleep when their schedule demands work, leading to significantly lower performance. This is supported by an increasing number of studies that show that alertness, cognitive capacity, and vigilance of unadapted shift workers are impaired. Job performance suffers as well, leading to a decreased work rate, more quality-control errors, and accidents. An elaborate meta-analytic study has shown that unadapted shift workers have almost a third greater risk of work-related accidents. When shift workers are not able to obtain consistently their required number of hours of sleep after their shifts, a chronic sleep debt begins to accumulate. With each period of insufficient sleep, cognitive performance deteriorates further.

Quantitative Assessment of Regional Debris-Flow Risk: A Case Study in Southwest China

This paper uses a comprehensive risk assessment method to investigate the population risk of debris flows in Southwest China. The methodology integrates models from hazard, vulnerability literature and some empirical equations. The main steps include debris-flow disaster-hazard zoning, estimation of the frequency of the disaster, factor identification of population vulnerability, and calculation of the fragility rate. The results demonstrate that the most hazardous regions in Southwest China are primarily observed in the mountains around the Sichuan Basin, the border area between Sichuan and Yunnan Provinces, the eastern and southern regions of Yunnan Province, and the eastern area of Guizhou Province. The extremely high vulnerability zones are characterized by a fragility rate of 3.89 persons per 10,000 people. The comprehensive risk gradually increases from the southeast of the study area to the central region, reaching its highest value (more than 100 persons/year) on the Jiangyou–Zhaotong–Baoshan Line and decreasing thereafter to its lowest in the northwestern region. Extremely large-scale disasters are the major factor of casualties. Appropriate risk management and mitigation solutions should be comprehensively determined based on the combination of debris-hazard levels and fragility rates in the hazardous regions.

The contribution of global sourcing to the economic performance of organizations: Analysis of the points of view of the supply chain participants

Purpose: This paper aims at investigating the reasons for the complex and long lead time from global suppliers that causes inventory shortages. It focuses on supply chain risk management in global sourcing. This study has revealed all the specific risks of a global sourcing project and has provided some solutions for risk management: three-step risk management, safety stock, data sharing and driving supplier performance.Design/methodology/approach: A qualitative study is conducted to propose concrete recommendations on three topics: risk management, safety stock and information sharing. A semi-structured survey-guided interview was used to collect related data, and the answers were assessed using syntactic, lexical, thematical and NVivo software analysis.Findings: This study has revealed all the specific risks of a global sourcing project and has provided some solutions for risk management: three-step risk management, safety stock, data sharing and driving supplier performance.Originality/value: Through research work, we have noticed that the world of the Supply Chain is constantly evolving and that it is becoming more and more complex. Through these interviews, we have noticed that the role of purchasing is changing differently in each sector.

Capacity and Funding: Examining Local Disaster Risk Reduction and Management (DRRM) Gaps, Challenges, and Solutions for High-Risk, Low-Income (LGUs)

In 2010, the Philippines Disaster Risk Reduction and Management (DRRM) Act created a Local DRRM Fund (LDRRMF) for local governments and mandated the allocation and use of 5% of their estimated revenues from regular sources. Seven years after the enactment of the law, low-income and high-risk local governments (4th to 6th class municipalities) continue to struggle to perform their mandates as frontliners in DRRM. This paper examined the funding sources and requirements of these LGUs and assessed whether current funds and mechanisms are responsive to their needs and plans. Using secondary data made available by national and local governments, key informant interviews and focus group discussions in 10 municipalities, the paper showed that LDRRMF is insufficient to meet the needs of LGUs whose overall budgets are too low to address multiple disaster risks. In some cases, budget utilization is low due to the LGU’s weak absorptive and technical capacity, spending priorities, inability to plan and implement long-term DRRM programs and projects such as infrastructure, and lengthy documentary requirements and processes in procurement. Absorptive capacity concerns the quality of institutions and policies, from formal laws, regulations to informal structures and incentives which shape the behavior of politicians and local bureaucrats (Overseas Development Institute, 2004). Other sources of financial and non-financial assistance from national government agencies, international and local non-government institutions, bilateral partners and the private sector are available to augment the LDRRMF. However, the lack of capacity hinders access to these additional resources. Most of these LGUs have to fully organize their LDRRM Councils and LDRRM offices, and build the capacity of LDRRM officers, who in most cases have multiple roles and functions, to plan, prioritize and implement. The support of local chief executives is critical in moving DRRM plans forward. The study recommends the following: a) explore possibilities on the use of LDRRMF for salaries of a dedicated LDRRM Officer and staff, and conduct further studies on exempting the LDRRMO position under the Local Government’s salary cap particularly in low-income, high-risk LGUs; b) prioritize construction of Operations Center, LDRRM Offices and evacuation centers to resolve the gap in the state of infrastructure and equipage among LGUs; c) build capacity on program development, management and procurement; d) establish a system that enables the national government to harmonize and simplify requirements and process to access additional funds; and, e) support dialogues between national and local governments to improve policy guidelines.

Soft Ethics: Its Application to the General Data Protection Regulation and Its Dual Advantage

In previous works (Floridi 2018) I introduced the distinction between hard ethics (which may broadly be described as what is morally right and wrong independently of whether something is legal or illegal), and soft or post-compliance ethics (which focuses on what ought to be done over and above existing legislation). This paper analyses the applicability of soft ethics to the General Data Protection Regulation and advances the theory that soft ethics has a dual advantage—as both an opportunity strategy and a risk management solution.

Improving Operational Risk Management Using Business Performance Management Technologies

Operational Risk Management (ORM) comprises the continuous management of risks resulting from: human actions, internal processes, systems, and external events. With increasing requirements, complexity and a growing volume of risks, information systems provide benefits for integrating risk management activities and optimizing performance. Business Performance Management (BPM) technologies are believed to provide a solution for effective Operational Risk Management by offering several combined technologies including: work flow, data warehousing, (advanced) analytics, reporting and dashboards. BPM technologies can be integrated with an organization’s Planning & Control cycle and related to strategic objectives. This manuscript aims to show how ORM can benefit from BPM technologies via the development and practical validation of a new maturity model. The B4ORM maturity model was developed following the Design Science Research approach. The maturity model relates specific maturity levels of ORM processes with BPM technologies applicable for a specific maturity stage. There appears to be a strong relationship (0.78) with ORM process maturity and supporting BPM technologies. The B4ORM maturity model as described in this manuscript provides an ideal path of BPM technologies related to six distinctive stages of ORM, leading towards technologies suitable for continuous improvement of ORM processes and organization-wide integration.

Soft Ethics: Its Application to the General Data Protection Regulation and Its Dual Advantage

In previous works (Floridi 2018) I introduced the distinction between hard ethics (which may broadly be described as what is morally right and wrong independently of whether something is legal or illegal), and soft or post-compliance ethics (which focuses on what ought to be done over and above existing legislation). This paper analyses the applicability of soft ethics to the General Data Protection Regulation and advances the theory that soft ethics has a dual advantage—as both an opportunity strategy and a risk management solution.

A comprehensive solution for risk management in software development projects

Risk management is a never ending process in the life cycle of a software project. For efficient risk management, it is necessary to have deep understanding of risk, its types, mitigation strategies so that either the risk is avoidable in future or the impact of the same can be brought down. This paper essentially deals with comprehensive understanding of risk from different perspectives and offers a solution-research methodology for efficient risk management. Risk is prioritised based on the impact that is measured with the help of essential parameters that are inevitable to complete the development cycle of the project. Authors have proposed enhanced risk analysis (ERA) approach to identify measure and calculate the occurrence of risk which can get prioritised. Based on the priority, solution is applied either to mitigate or to bring down the impact of these risks leaning towards the successful completion of the software development project on time.

A comprehensive solution for risk management in software development projects

Risk management is a never ending process in the life cycle of a software project. For efficient risk management, it is necessary to have deep understanding of risk, its types, mitigation strategies so that either the risk is avoidable in future or the impact of the same can be brought down. This paper essentially deals with comprehensive understanding of risk from different perspectives and offers a solution-research methodology for efficient risk management. Risk is prioritised based on the impact that is measured with the help of essential parameters that are inevitable to complete the development cycle of the project. Authors have proposed enhanced risk analysis (ERA) approach to identify measure and calculate the occurrence of risk which can get prioritised. Based on the priority, solution is applied either to mitigate or to bring down the impact of these risks leaning towards the successful completion of the software development project on time.

Germline mutations in hereditary diffuse gastric cancer.

Gastric cancer is one of the leading causes of cancer-related deaths worldwide. Among which, about 1%-3% of gastric cancer patients were characterized by inherited gastric cancer predisposition syndromes, knowing as hereditary diffuse gastric cancer (HDGC). Studies reported that CDH1 germline mutations are the main cause of HDGC. With the help of rapid development of genetic testing technologies and data analysis tools, more and more researchers focus on seeking candidate susceptibility genes for hereditary cancer syndromes. In addition, National Comprehensive Cancer Network (NCCN) guidelines recommend that the patients of HDGC carrying CDH1 mutations should undergo prophylactic gastrectomy or routine endoscopic surveillances. Therefore, genetic counseling plays a key role in helping individuals with pathogenic mutations make appropriate risk management plans. Moreover, experienced and professional genetic counselors as well as a systematic multidisciplinary team (MDT) are also required to facilitate the development of genetic counseling and benefit pathogenic mutation carriers who are in need of regular and standardized risk management solutions. In this review, we provided an overview about the germline mutations of several genes identified in HDGC, suggesting that these genes may potentially act as susceptibility genes for this malignant cancer syndrome. Furthermore, we introduced information for prevention, diagnosis and risk management of HDGC. Investigations on key factors that may have effect on risk management decision-making and genetic data collection of more cancer syndrome family pedigrees are required for the development of HDGC therapeutic strategies.

Enterprise Risk Management in Kosovo’s Banking Sector

Abstract Today risk management plays a vital role in business. Each firm, whether big or small, makes an effort to manage risk more effectively. Risk management is very important in the financial system, especially in banks. Billions of Euros are spent each year on the financial reporting of banks. Banks should implement effective solutions in risk management to mitigate their risks. Great financial debate that originated in the 1990s is reportedly linked to errors that occurred in the banking sector due to poor risk management. It should be noted that today technology plays a key role in risk management and it has already had a positive effect on the financial industry. Analysis of risk and its management has become significant in the Kosovo economy since the post-war period. The nature of the banking business is threatened by risks because more financial products are becoming complicated. The main role of banks is intermediation between those who have resources and those seeking them. Banks face various risks at the corporate level, such as operational, liquidity, legal, credit, and market risks; thus, these risks should be converted into a composite measure. This research aims to determine practices and effects of risk management in the banking sector. Relevant data were collected from banks through questionnaires and telephone interviews; analysis has been conducted using statistical tools. This study will engage both the quantitative and qualitative methods of data analysis. Dependent variables will be separated from independent variables, and regression analysis will be used to analyse the quantitative data.

A Systematic Approach to the Dilemma between Flood Vulnerability and Resilience - Review and Concepts

The nature of "vulnerability" is that it not only exists when elements at risk are exposed to flood, but also hides in interactions between environmental, social and economic factors before the flood incident. While ecological resilience reflects the dynamic characteristics of resources, ecological vulnerability systematically describing aspects of stress was less researched. This paper develops a concept, modeling dynamic interactions between stress and resources taking into account of context, space, time, and stakeholder involvements, to provide direct causes and solutions for flood risk management. The paper reviews three major schools of thought concerning (i) vulnerability and resilience are two sides of the same coin, (ii) resilience is a part of vulnerability, and (iii) they are two separated concepts with some overlaps. Limitations of the schools of thought were recognized based on four main criteria: (i) vulnerability and resilience must reflect all social, economic and environmental aspects, (ii) they exist regardless of hazards, (iii) they are processes than outcomes, and (iv) they entail multiple objectives. Inspired by the flipping coin and separated concepts, a new framework has been developed. It acknowledges from outstanding points of the two that vulnerability and resilience are normalized as stress and resources of the same coin. Additionally, they can generate positive and/or negative outcomes. Therefore, their relationships are complex because resources, defined by stakeholders, may prevent system changes and consequently amplify stress. Depending on the ratio between stress and resources, a system can be characterized as a 'resistant', or a 'creative' regime. If incremental disturbances exceed the recovery threshold as defined by the available data and the stakeholders, the system might change regime. Decision makers can take advantage of this framework to prepare appropriate resources that increase the resilience of the community and anticipate adverse effects for incoming floods.