Contextualising risk within enterprise risk management through the application of systems thinking

New and emerging risks create growing uncertainty and unpredictability within enterprise risk management. While ISO 31000:2009 is a progressive risk management framework, it is limited in its guidance on how to contextualise complex risks. The application of systems thinking to risk management provides the opportunity to better understand complexity by viewing risk and the consequence of change as part of overall system behaviour. System modelling tools enable organisations to better contextualise their risk landscape. These tools assist organisations to identify vulnerabilities between social and ecological variables in the system within they exist. Determining drivers of change leading to system vulnerabilities can assist in understanding threshold limits of the system, thus enabling the organisation to build system resilience and organisational sustainability.     

A Comparative Approach for Ranking Contaminated Sites Based on the Risk Assessment Paradigm Using Fuzzy PROMETHEE

A ranking system for contaminated sites based on comparative risk methodology using fuzzy Preference Ranking Organization METHod for Enrichment Evaluation (PROMETHEE) was developed in this article. It combines the concepts of fuzzy sets to represent uncertain site information with the PROMETHEE, a subgroup of Multi-Criteria Decision Making (MCDM) methods. Criteria are identified based on a combination of the attributes (toxicity, exposure, and receptors) associated with the potential human health and ecological risks posed by contaminated sites, chemical properties, site geology and hydrogeology and contaminant transport phenomena. Original site data are directly used avoiding the subjective assignment of scores to site attributes. When the input data are numeric and crisp the PROMETHEE method can be used. The Fuzzy PROMETHEE method is preferred when substantial uncertainties and subjectivities exist in site information. The PROMETHEE and fuzzy PROMETHEE methods are both used in this research to compare the sites. The case study shows that this methodology provides reasonable results.     

Heterogeneous and unconventional coalitions around global food risks: integrating Brazil into the debates

Current debates about food-borne risks (GMOs and BSE) have not only deepened public concern about how food is produced on farms, processed in factories, and transported, stored and traded. More importantly, these debates have exposed a crisis related to central social issues, such as the role of science, politics and business corporations in the decision-making processes for determining which risks societies should, or are prepared to, assume. In this article, I discuss how cultural and social constructivist studies of environmental and health risks and Ulrich Beck's theory of world risk society can contribute to the analysis of how to deal with these conflicts. The criticism of quantitative methods of risk analysis has resulted in a certain idealization of the lay knowledge of risks as being intuitively more correct than the scientific one. One consequence of this polarization between expert and lay knowledge—idealizing the latter—is a disappointing vagueness when looking for alternatives on how to deal practically with risks that have important consequences. A key obstacle to the implementation of some of the suggestions presented by the critical risk analysis approach is that, for example, in the current global dynamics of food-borne risks we can find heterogeneous alliances for and against GMOs allying lay people and experts, as well as conventional and unconventional social actors, in a complicated manner, at the regional, national and international levels. Since a significant part of the analysis of manufactured risks focuses on the situation of highly industrialized countries, a more complex perspective of these lay and scientific alliances can be obtained from a more extensive study of the reactions surrounding GMOs and BSE in less-industrialized countries, such as Brazil. Copyright © 2002 John Wiley & Sons, Ltd.     

Risk management is not enough: a conceptual model for resilience and adaptation-based vulnerability assessments

The US government has focused considerable attention on enhancing our society’s ability to protect critical systems and services from disruptive events. Over the past decade, federal agencies have bolstered their efforts to identify and minimize threats using traditional risk-based approaches such as continuity of operations and disaster risk reduction processes. However, these valuable risk identification and management tools are limited because they rely upon foreseeable factor analyses of steady-state systems with predictable hazard frequencies and severities. In assessing the capability of complex adaptive systems to cope with disruptions, an overemphasis upon engineering resilience through risk management and planning for what is predictable may cloud or detract from our efforts to better understand a system’s emergent capabilities to withstand disruptions that are unforeseeable. This article contends that augmenting traditional risk approaches through the incorporation of methodologies grounded in socio-ecological system (SES) resilience principles offers a potential avenue for improving our agencies’ abilities to assess and manage both known and unknown risks. We offer a notional rationale for broadening our examination of system vulnerabilities and present a conceptual model that combines engineering and SES resilience paradigms to facilitate the identification, assessment, and management of system vulnerabilities. The Military Installation Resilience Assessment model described herein applies risk and resilience principles to evaluate whole systems, focusing on interconnections and their functionality in facilitating response and adaptation.     

FUZZY DECISION MAKING IN GROUND WATER NITRATE RISK MANAGEMENT1

ABSTRACT: Ground water nitrate contamination is widespread in the United States and especially prevalent in agriculture-intensive areas such as the Midwest. To reduce human health risks (i.e., methemoglobinemia and cancer risks) from nitrates in ground water supplies, several nitrate risk-management strategies can be developed based on acceptable levels of human health risks, the reasonableness of the cost required for risk reduction, and the technical feasibility of nitrate-control methods. However, due to a lack of available information, assessing risk, cost, and technical feasibility contains elements of uncertainty. In this paper, a nitrate risk-management methodology using fuzzy sets in combination with a multicriterion decision-making (MCDM) technique is developed to assist decision makers in evaluating, with uncertain information, possible regulatory actions along with the various nitrate risk-management strategies in order to determine an appropriate strategy. The methodology is illustrated using data from a community with a nitrate water-quality problem.     

Growth of the Decision Tree: Advances in Bottom‐Up Climate Change Risk Management

There has recently been a return in climate change risk management practice to bottom‐up, robustness‐based planning paradigms introduced 40 years ago. The World Bank's decision tree framework (DTF) for “confronting climate uncertainty” is one incarnation of those paradigms. In order to better represent the state of the art in climate change risk assessment and evaluation techniques, this paper proposes: (1) an update to the DTF, replacing its “climate change stress test” with a multidimensional stress test; and (2) the addition of a Bayesian network framework that represents joint probabilistic behavior of uncertain parameters as sensitivity factors to aid in the weighting of scenarios of concern (the combination of conditions under which a water system fails to meet its performance targets). Using the updated DTF, water system planners and project managers would be better able to understand the relative magnitudes of the varied risks they face, and target investments in adaptation measures to best reduce their vulnerabilities to change. Next steps for the DTF include enhancements in: modeling of extreme event risks; coupling of human‐hydrologic systems; integration of surface water and groundwater systems; the generation of tradeoffs between economic, social, and ecological factors; incorporation of water quality considerations; and interactive data visualization.     

IFRP: a hybrid interval-parameter fuzzy robust programming approach for waste management planning under uncertainty

In this study, an interval-parameter fuzzy-robust programming (IFRP) model is developed and applied to the planning of solid waste management systems under uncertainty. As an extension of the existing fuzzy-robust programming and interval-parameter linear programming methods, the IFRP can explicitly address system uncertainties with complex presentations. Parameters in the IFRP model can be represented as interval numbers and/or fuzzy membership functions, such that the uncertainties can be directly communicated into the optimization process and resulting solution. Furthermore, highly uncertain information for the lower and upper bounds of interval parameters that exist due to the complexity of the real world can be effectively handled through introducing the concept of fuzzy boundary interval. Consequently, robustness of the optimization process and solution can be enhanced. Results of the case study indicate that useful solutions for planning municipal solid waste management practices can be generated. They reflect a compromise between optimality and stability of the study system. Willingness to pay higher costs will guarantee the system stability; however, a desire to reduce the costs will run the risk of potential instability of the system. The results also suggest that the proposed hybrid methodology is applicable to practical problems that are associated with highly complex and uncertain information.     

Are Wastewater Systems Adapting to Climate Change?

Wastewater (WW) systems are vulnerable to extreme precipitation events; storm‐induced WW system failures pollute the environment and put public health at risk. Despite these vulnerabilities, we know very little about how WW managers are responding to current climate risks or to future climate change. This study aims to fill this critical gap in the literature. Data from surveys and interviews were used to understand what WW managers are doing to adapt to the current climate, what facilitates those adaptations, and if they are adapting to future climate change. Findings show most WW managers (78%) are making changes to build resiliency to storms they have experienced in the past (e.g., extra fuel on site, extra staff on call, more training, better communication, adding generators, elevating components, adding capacity); most are not adapting to future climate change. Our work suggests organizational leadership, concern about future climate‐related impacts, and experiencing storm impacts drive resiliency changes while regulatory requirements drive adaptation to future climate change. Beyond advancing science, our work offers practical suggestions for building WW system resilience and for increasing WW system's consideration of future climate impacts in their resiliency building efforts.     

Governing Climate Adaptation in the Local Arena: Challenges of Risk Management and Planning in Sweden

This paper directs attention to conditions for climate adaptation as an important part of governing climate change in the local arena. Empirical focus is put on attempts to manage flood risks by means of risk management and planning in two Swedish municipalities. Following the need to widen our understanding of how, when and under what conditions climate adaptation occurs, three challenges are particularly emphasized from the case studies: facing the safety vs. scenery conflict where political priorities and reducing societal vulnerabilities prove difficult; the process of deciding what to adapt to, in which the troublesome role of knowledge is striking; and finally, taking responsibility for measures of flood protection. At the end of the paper, analytical generalizations illustrate the need to give increased attention to institutional challenges and challenges emanating from the science-policy interface in order to come to terms with the implementation deficit in governing climate change in the local arena.     

WATER CONSTRAINTS ON ENERGY DEVELOPMENT: A FRAMEWORK FOR ANALYSIS1

ABSTRACT: The pressure on water resources from energy resource development and transformation is likely to be greater in the future than it has been in the past. A rational resolution of the political problems that this situation will generate requires that: 1) planning based on predictions of future energy supply and demand be replaced by scenario, or “what if?” analysis; 2) full attention be paid to the uncertainties in per-unit-energy water requirements; 3) suitable stochastic measures of water availability be used to compare water supply with water demand; 4) realistic ecological criteria, and other alternative use criteria, be developed for estimating impacts of water withdrawn or consurned for energy development; 5) human consequences of ecological impaccts are described in a manner that will allow the political process to intervene in an optimum manner to allocate water resources.     

A Review of Water Quality Responses to Air Temperature and Precipitation Changes 2: Nutrients,Algal Blooms,Sediment, Pathogens

In this paper we review the published, scientific literature addressing the response of nutrients, sediment, pathogens, and cyanobacterial blooms to historical and potential future changes in air temperature and precipitation. The goal is to document how different attributes of water quality are sensitive to these drivers, to characterize future risk, to inform management responses, and to identify research needs to fill gaps in our understanding. Results suggest that anticipated future changes present a risk of water quality and ecosystem degradation in many United States locations. Understanding responses is, however, complicated by inherent high spatial and temporal variability, interactions with land use and water management, and dependence on uncertain changes in hydrology in response to future climate. Effects on pollutant loading in different watershed settings generally correlate with projected changes in precipitation and runoff. In all regions, increased heavy precipitation events are likely to drive more episodic pollutant loading to water bodies. The risk of algal blooms could increase due to an expanded seasonal window of warm water temperatures and the potential for episodic increases in nutrient loading. Increased air and water temperatures are also likely to affect the survival of waterborne pathogens. Responding to these challenges requires understanding of vulnerabilities, and management strategies to reduce risk.     

Governing Climate Adaptation in the Local Arena: Challenges of Risk Management and Planning in Sweden

Abstract

This paper directs attention to conditions for climate adaptation as an important part of governing climate change in the local arena. Empirical focus is put on attempts to manage flood risks by means of risk management and planning in two Swedish municipalities. Following the need to widen our understanding of how, when and under what conditions climate adaptation occurs, three challenges are particularly emphasized from the case studies: facing the safety vs. scenery conflict where political priorities and reducing societal vulnerabilities prove difficult; the process of deciding what to adapt to, in which the troublesome role of knowledge is striking; and finally, taking responsibility for measures of flood protection. At the end of the paper, analytical generalizations illustrate the need to give increased attention to institutional challenges and challenges emanating from the science–policy interface in order to come to terms with the implementation deficit in governing climate change in the local arena.     

Metal scarcity and sustainability,analyzing the necessity to reduce the extraction of scarce metals

There is debate whether or not further growth of metal extraction from the earth's crust will be sustainable in connection with geologic scarcity. Will future generations possibly face a depletion of specific metals? We study whether, for which metals and to what extent the extraction rate would need to be reduced in order to be sustainable. To do so, we propose an operational definition for the sustainable extraction rate of metals. We have divided 42 metals in 4 groups according to their geologic scarcity. Applying the proposed sustainability definition to the 17 scarcest metals, shows that for almost all considered metals the global consumption of primary resources needs to be reduced to stay within sustainable limits as defined in our analysis. The 8 geologically scarcest metals are antimony, bismuth, boron, copper, gold, molybdenum, rhenium and zinc.     

The risks of radiation

Summary The risks of radioactivity are a really complicated matter, yet they are much better known than are the risks relating to thousands of chemical poisons that occur in our environment. The greatest mistakes are probably made in the definition of safety margins. Except for the bombs dropped in Japan and one other case in the Marshall Islands, there has always—luckily—been a wide safety margin between fallout radiation and doses dangerous to health; the margin has actually been about 1000-fold. The Chernobyl dose of 0.5 mGy/year that we received is only 1/1000 of the acute dose of 0.5 Gy which would cause a slight and nonpermanent change in the blood picture.There is no such safety margin with respect to many air pollutants. The safety standards for sulfuric or nitric oxides, ozone and so on, have been set only just below the level that already causes a health hazard, and these standards are exceeded once in a while. Otherwise, traffic would have to be forbidden and many industrial plants, especially power stations using coal, would have to stop working whenever a low-temperature inversion occurred. Environmental radioactivity does not represent a likely health risk in Finland unless a nuclear war breaks out. Air pollutants, on the contrary, are a real and almost daily health risk that should be carefully considered when decisions about our energy production are being made.In spite of what happened at Chernobyl, global consumption of nuclear power will double by the year 2000, since there are about 140 nuclear power plants presently under construction. It is not likely that another catastrophe like Chernobyl will happen, yet nuclear plant accidents are of course possible, even if their likelihood is diminished by improving reactor safety and even if any eventual damage could be expected to be smaller. If a reactor is hooded by a containment structure, no significant release of radioactive materials should be possible even in case of an accident. However, we must be prepared to protect the population with carefully planned civil defense and radiation protection measures.I would like to sum up all of this as follows: The risks of radiation are a fact, but the fear they arouse is often disproportionate. There are risks related to all other methods of energy production as well; nuclear power is no exception in that respect. It is good that we aim at greater safety, but I hope that false presumptions will not lead us to mistaking a less safe alternative for a safer one.     

Valuing uncertain asset cash flows when there are no options: A real options approach

The real option valuation method is often presented as an alternative to the traditional discounted cash flow (DCF) approach because it is able to quantify the additional asset value arising from flexible asset management. However, these two valuation methods differ on a more fundamental level: their approach to determining the effects of cash flow uncertainty on asset value. Real option valuation adjusts for risk within the cash flow components while the DCF method discounts for risk at the aggregate net cash flow. This seemingly small difference allows the real option method to differentiate assets according to their unique risk characteristics, while the conventional DCF approach cannot.This paper presents an overview of the real options and conventional DCF frameworks for valuing uncertain cash flows. To emphasize the approaches' different treatment of risk we assume an absence of managerial flexibility. Using simple algebra, this paper demonstrates that the traditional DCF method fails to adequately discount net cash flow risk, no matter what discount rate is used. Finally, in a stylized mining example we show that DCF rules would lead a developer to forego $24.5 million in value creation, at a profitability index of 1.49, by making a poor investment decision.     

Fusing strategic risk and futures methods to inform long-term strategic planning: case of water utilities

Risks and futures methods have complementary strengths as tools for managing strategic decisions under uncertainty. When combined, these tools increase organisational competency to evaluate and manage long-term risks, improving the flexibility and agility of the organisation to deal with gross uncertainties. Here, we set out a framework to guide the assessment of strategic risks for long-term business planning, based on its application at Portugal’s largest water utility, Empresa Portuguesa das Águas Livres. Our approach extends strategic risk assessment by incorporating scenario planning—a futures approach used to help the utility move beyond single point forecast of risks to focus on critical dimensions of uncertainty that are fundamental to the resilience of corporate objectives and their vulnerability to external pressures. We demonstrate how we combine two complementary approaches—risk and futures—and use them to assess (i) how a set of baseline strategic risks for a water utility evolves under alternative futures, (ii) the aggregate corporate-level risk exposure, and (iii) the process and responses needed to manage multiple, interdependent strategic risks. The framework offers a corporate approach to evolving strategic risks and improves a utility’s (i) knowledge of uncertainties, (ii) ability to assess the impacts of external developments over long time horizons and the consequences of actions and (iii) degree of flexibility to adapt to possible future challenges. The framework supports risk managers in their long-term strategic planning, through the appraisal and management of multiple, interdependent long-term strategic risks and can be replicated in other organisational contexts to bridge operational and corporate perspectives of enterprise risk.

     

环境法视域下的生物安全风险规制

生物安全领域的环境风险包括科技风险、生态风险和环境健康风险三种类型。我国目前尚未形成健全的生物安全风险规制制度体系,科技风险规制机制不健全、生态风险规制忽视生物多样性保护、环境健康风险规制领域尚存空白等问题依然存在。为此,应确立多元化的立法目的体系,推动风险规制的类型化制度安排,有效衔接生物安全立法与环境保护法律规范,以最大限度地预防和降低生物安全风险可能带来的损害。