Delayed-Bang Approach Towards More Sustainable Critical Infrastructure Risk Management

This article describes the Delayed Bang Approach for determining the value of risk management alternatives in critical infrastructure security. The discussion includes (1) the need for sustainable risk management (2) the importance of time valuation in evaluating competing loss prevention and loss reduction alternatives, (3) the convergence of deterministic engineering economics, survivability analysis, and probabilistic analysis, and (4) hypothetical examples of the Delayed-Bang Approach and significance towards more sustainable risk management

Evaluating the Impact Of Foreign Exchange Rate Risk On The Capital Budgeting For Multinational Firms

Capital budgeting analysis has evolved to the point where large firms universally use sophisticated capital budgeting techniques.[1]  However, small firms are less likely to use sophisticated capital budgeting techniques.[2]  Even large firms do not generally use simulation for risk analysis in multinational project capital budgeting analysis.[3]  This paper provides a discussion and example of the use of simulation in evaluating the impact of foreign exchange rate volatility on multinational project capital budgeting analysis.[1] Bierman, Harold, Jr. “Capital Budgeting in 1991:  A Survey,” Financial Management, Autumn 1993, pp. 21-29.[2]  See, for example, Block, Stanley. “Integrating Traditional Capital Budgeting Concepts into an International Decision-Making Environment,” The Engineering Economist, 45(4), 2000, pp. 309-325 or Graham, John R. and Campbell R. Harvey.  “The Theory and Practice of Corporate Finance:  Evidence from the Field,” Journal of Financial Economics, 60, 2001, pp. 187-243.[3] See, for example, Farragher, Edward, Robert Kleiman, and Anandi, Sahu.  “The Association Between the Use of Sophisticated Capital Budgeting Practices and Corporate Performance,” The Engineering Economist, 46(4), 2001, pp. 300-31, Ho, Simon S. M. and Richard H. Pike.  “Risk Analysis in Capital Budgeting Contexts:  Simple or Sophisticated?,” Accounting and Business Research, 21(83), 1991, pp. 227-238, Klammer, T. “Empirical Evidence of the Adoption of Sophisticated Capital Budgeting Techniques,” The Journal of Business, July 1972, pp. 387-397, and Klammer, T., B. Koch, and N. Wilner.  “Post-auditing Capital Assets and Firm Performance:  An Empirical Investigation,” Managerial and Decisions Economics, (12), 1991, pp. 317-327

PREFACE: Handbook of Research on Big Data Clustering and Machine Learning

Big Data and Management Science has been designed and done to synthesize the analytic principles with business practice and big data. Specifically, the book provides an interface between the main disciplines of engineering/technology and the organizational, administrative, and planning abilities of management. It is complementary to other sub-disciplines such as economics, finance, marketing, decision and risk analysis, etc. The Advances in Analytics in Big Data synthesizes the analytic principles with Big Data and provides an interface between the main disciplines of engineering/economics and the organizational, administrative, and planning abilities of management. It is also complementary to other disciplines such as finance, marketing, decision and risk analysis. In this book each chapter discusses different topics in Advances in Business Analytic

Defining and measuring risk and opportunity in BOCR framework for decision analysis

Decision aid through analysis of benefit, opportunity, cost and risk (BOCR) offer the structural framework to get all necessary information to an effective decision making. It was investigated by researchers of differents fields (economics, engineering, management, ...) and many evaluation and recommendation methods have been published in the literature to help decision makers to make their choice. However, most of the existing methods do not focus on quantification and evaluation of uncertain parameters of decision problem representing risk and opportunity. To address these issues, we propose in this paper a new BOCR analysis framework including definition and a measure of risk and opportunity. The basic idea highlights the bipolarity nature of the attributes that characterize alternatives with regard to objectives. Indeed, we consider that alternatives are evaluated against several objectives by using many features of them known as attributes. Taking into account uncertainty of some components or relationships, this paper proposes explicit modeling of risk and opportunity in the BOCR framework. The evaluation and recommendation because of the bipolar nature are made using the Satisficing game theory

A new risk reduction indicator for dam safety management combining efficiency and equity principles

[EN] Large dams are critical infrastructures whose failure could produce high economic and social consequences. Risk analysis has been shown to be a suitable methodology to assess these risks and to inform dam safety management. In this sense, risk reduction indicators are a useful tool to manage risk results, yielding potential prioritisation sequences of investments in dams portfolios. Risk management is usually informed by two basic principles: efficiency and equity. These two principles many times conflict, requiring a tradeoff between optimising the expenditures and providing a high level of protection to all individuals. In this paper, the risk reduction indicator Equity Weighted Adjusted Cost per Statistical Life Saved (EWACSLS) is presented. This indicator allows obtaining prioritisation sequences of investments while maintaining an equilibrium between equity and efficiency principles. In order to demonstrate its usefulness, it has been applied in a real-world case study, a portfolio of 27 dams where 93 structural and non-structural investments are prioritised. The EWACSLS indicator is analysed in detail and its results are compared with other existing risk reduction indicators, showing its flexibility and how it can be a very well balanced indicator for the purpose of prioritisation of risk reduction measures.This paper was published with the support of the research project ‘INICIA’ (Methodology for Assessing Investments on Water Cycle Infrastructures informed on Risk and Energy Efficiency Indicators, BIA2013-48157-C2- 1-R, 2014-2016); co-funded by the Spanish Ministry of Economy and Competitiveness ‘Ministerio de Economía y Competitividad’ (Programa Estatal de Investigación, Desarrollo e Innovación Orientada a los Retos de la Sociedad); and the European Regional Development Fund (ERDF).Serrano Lombillo, AJ.; Morales Torres, A.; Escuder Bueno, I.; Altarejos García, L. (2016). A new risk reduction indicator for dam safety management combining efficiency and equity principles. Structure and Infrastructure Engineering. 13(9):1157-1166. https://doi.org/10.1080/15732479.2016.1245762S11571166139Blackorby, C., & Donaldson, D. (1977). Utility vs equity. Journal of Public Economics, 7(3), 365-381. doi:10.1016/0047-2727(77)90055-xBleichrodt, H. (1997). Health utility indices and equity considerations. Journal of Health Economics, 16(1), 65-91. doi:10.1016/s0167-6296(96)00508-5De Blaeij, A., Florax, R. J. G. ., Rietveld, P., & Verhoef, E. (2003). The value of statistical life in road safety: a meta-analysis. Accident Analysis & Prevention, 35(6), 973-986. doi:10.1016/s0001-4575(02)00105-7(2001). The Economic Journal, 111(471). doi:10.1111/ecoj.2001.111.issue-471Dolan, P. (1998). The measurement of individual utility and social welfare. Journal of Health Economics, 17(1), 39-52. doi:10.1016/s0167-6296(97)00022-2Dundar, H. (1999). Equity, quality and efficiency effects of reform in Turkish higher education. Higher Education Policy, 12(4), 343-366. doi:10.1016/s0952-8733(99)00016-1Jonkman, S. N., van Gelder, P. H. A. J. M., & Vrijling, J. K. (2003). An overview of quantitative risk measures for loss of life and economic damage. Journal of Hazardous Materials, 99(1), 1-30. doi:10.1016/s0304-3894(02)00283-2Joshi, N. N., & Lambert, J. H. (2007). Equity Metrics With Risk, Performance, and Cost Objectives for the Prioritization of Transportation Projects. IEEE Transactions on Engineering Management, 54(3), 539-547. doi:10.1109/tem.2007.900790(1997). Risk Analysis, 17(4). doi:10.1111/risk.1997.17.issue-4Khadam, I. M., & Kaluarachchi, J. J. (2003). Multi-criteria decision analysis with probabilistic risk assessment for the management of contaminated ground water. Environmental Impact Assessment Review, 23(6), 683-721. doi:10.1016/s0195-9255(03)00117-3Linnerooth-Bayer, J., & Amendola, A. (2000). Global Change, Natural Disasters and Loss-sharing: Issues of Efficiency and Equity. Geneva Papers on Risk and Insurance - Issues and Practice, 25(2), 203-219. doi:10.1111/1468-0440.00060(1999). Economic Inquiry, 37(4). doi:10.1111/ecin.1999.37.issue-4Morales-Torres, A., Serrano-Lombillo, A., Escuder-Bueno, I., & Altarejos-García, L. (2016). The suitability of risk reduction indicators to inform dam safety management. Structure and Infrastructure Engineering, 1-12. doi:10.1080/15732479.2015.1136830(2011). Risk Analysis, 31(6). doi:10.1111/risk.2011.31.issue-6Stewart, M. G., & Mueller, J. (2008). A risk and cost-benefit assessment of United States aviation security measures. Journal of Transportation Security, 1(3), 143-159. doi:10.1007/s12198-008-0013-0Yamano, N., & Ohkawara, T. (2000). The Regional Allocation of Public Investment: Efficiency or Equity? Journal of Regional Science, 40(2), 205-229. doi:10.1111/0022-4146.0017

Das neue Gentechnikgesetz Рein Gentechnikverhinderungsgesetz? Eine umwelțkonomische Analyse der haftungsrechtlichen Neuerungen im Gentechnikgesetz

In this article, legal consequences of the new German genetic engineering act are analyzed. In addition environmental economic analysis is presented of those parts of the act that introduce new litigation regulation to farmers. The different kinds of external costs arising from genetic engineering of plants and their allocation to different actors are considered. The paper focuses on the costs resulting from the postulated coexistence of conventional/organic farms and users of biotechnology. Excessive liability of farmers can be avoided, if the producers of genetically modified seeds accept any litigation claims against farmers. Furthermore, negotiations between neighbouring farms can be an option to keep the costs of damage prevention at reasonable levels.genetic engineering act, liability, coexistence, market loss, precautionary principle, Agricultural and Food Policy, Environmental Economics and Policy, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty,

Flood Risk Assessment, Management and Perceptions in a Changing World

Floods are a global challenge that is increasing due to changes in climate and human populations. Using an interdisciplinary approach, this work contributes novel methodologies and knowledge to three key challenges associated with floods. The first chapter builds upon the atmospheric and statistical sciences to provide a general methodology for climate informed approaches to projecting long-term flood events based on large-scale ocean-atmospheric processes. The second chapter builds upon the engineering, decision analysis, and economics disciplines to integrate climate-informed projections with decision-scaling, a decision-making under uncertainty framework, to further flood risk management. The third chapter builds upon the social sciences to provide new knowledge on flood risk perception and mitigation in West Africa. The outcomes of this work contribute important advancements to addressing the clear and urgent need for solutions to floods around the world

Stochastic models and methods for the assessment of earthquake risk in insurance

The problem of earthquake risk assessment and management in insurance is a challenging one at the interface of geophysics, engineering seismology, stochastics, insurance mathematics and economics. In this work, I propose stochastic models and methods for the assessment of earthquake risk from an insurer's point of view, where the aim is not to address problems in the financial mathematics and economics of risk selection, pricing, portfolio management, and risk transfer strategies such as reinsurance and securitisation, but to enable the latter through the characterisation of the foundation of any risk management consideration in insurance: the distribution of losses over a period of time for a portfolio of risks. Insurance losses are assumed to be generated by a loss process that is in turn governed by an earthquake process, a point process marked with the earthquake's hypocentre and magnitude, and a conditional loss distribution for an insurance portfolio, governing the loss size given the hypocentre and magnitude of the earthquake, and the physical characteristics of the portfolio as described in the individual policy records. From the modeling perspective, I examine the (non-trivial) minutiae around the infrastructure underpinning the loss process. A novel model of the earthquake process, a Poisson marked point process with spatial gamma intensity measure on the hypocentral space, and extensions of the Poisson and stress release models through the inclusion of hypocentral location in the mark, are proposed. I discuss the general architectural considerations for constructing the conditional loss distribution, and propose a new model as an alternative to the traditional ground motion attenuation and seismic vulnerability approach in engineering risk assessment. On the actuarial mathematics front, given a fully specified loss process, I address the problem of constructing simulation based and, where possible, analytical approximations to the distribution of portfolio losses over a period of time. I illustrate the applicability of the stochastic models and methods proposed in this work through the analysis of a residential homeowners property catastrophe portfolio exposed to earthquake risk in California. I construct approximations to the distribution of portfolio losses over a period of time under each of the three models of the earthquake process that I propose, and discuss their relative merits

Book Review: Big Data Management

Big Data and Management Science has been designed to synthesize the analytic principles with business practice and Big Data. Specifically, the book provides an interface between the main disciplines of engineering/technology and the organizational, administrative, and planning abilities of management. It is complementary to other sub-disciplines such as economics, finance, marketing, decision, and risk analysis. The recent advances in handling large data have led to increasingly more data being available, leading to the advent of Big Data. The volume of Big Data runs into petabytes of information, offering the promise of valuable insight. Visualization is the key to unlocking these insights; however, repeating analytical behaviors reserved for smaller data sets runs the risk of ignoring latent relationships in the data, which is at odds with the motivation for collecting Big Data. This book focuses on the analytic principles of business practice and big data. Specifically, it provides an interface between the main disciplines of engineering/technology and the organizational and administrative aspects of management, serving as a complement to books in other disciplines such as economics, finance, marketing, and risk analysis. The contributors present their areas of expertise, together with essential case studies that illustrate the successful application of engineering management theories in real-life examples

Management education for a sustainable electric power industry in the 21st century

This paper presents the results of research and outlines the experience in the adoption of new methods for the training of energy managers that meet the 21st century challenges. The analysis shows that the management (both in energy companies and business consumers) are not qualified to operate on global and national competitive energy markets: managerial decisions there are taken amid high risk and uncertainty; decisions are often taken in response to changes in the external environment; new unconventional approaches are needed for a successful result; the price of a bad management decision grows substantially. The empirical data that were obtained through the research shows the importance of the background knowledge of engineering and energy production technologies for managerial training; of developing readiness for innovative practices; of mastering pro-active self-development techniques. An interdisciplinary approach that puts together the "energy technologies-safety and environment-economics and finance-management" chain becomes the methodological foundation for energy training. The article looks at prerequisites, peculiarities and principles of global energy education and training of corporate managers, civil servants and other professionals who are involved in the electric power industry. © 2014 WIT Press.International Journal of Safety and Security Engineering;International Journal of Sustainable Development and Planning;WIT Transactions on Ecology and the Environmen