The project is attempting to categorize the risks that organisation faces e.g. Political, Operational, Strategic etc. The project envisages the future for an organisation and attempt to predict what are the key risks it could face 10 years from now. Course: Global Risk Trends – Markets and Mother Nature| Metropolia University of Applied Sciences, Finland

1. FINEST BAY AREA Analysis
Emilia Pulkkinen
Deenesh Ramsahye
Nhi Nguyen
Global Risk Trends LX00BE70-3001

2. Content
I. Introduction
II. Analysis
1. Environmental Risk
2. Social Risk
3. Strategic Risk
I. Conclusion

3. Introduction
Helsinki and Tallinn have growing volumes of freight and passengers
➢ The aim is to connect Finland and Estonia
Two metropolitan areas
➢ Analysing 3 specific areas of risks
Social risk - Environmental risk - Strategic risk

4. Environmental Risk
Environmental Risk can be defined as the “actual or potential threat
of adverse effects on living organisms and the environment by
effluents, emissions, wastes, resource depletion, etc., arising out of
an organization’s activities.”
● Water quality
● Climate - air emissions and air quality
● Soil - bedrock - seabed
● Underwater nature and fauna

5. Water quality
➢ From the figure, 11 qualitative
descriptors and their associated
measures indicate the positive
environmental status of marine
waters
➢ Good environmental status of
marine waters will not be
achieved in all respects by the
target year
➢ The major challenge is related
to the mitigation of
eutrophication and to
hazardous and harmful
substances
Environmental Risk

6. Climate - air emissions and air quality
➢ Out of total traffic emissions in Finland:
● Water transport accounts for the largest proportion of sulfur dioxide emissions by 94% of total sulfur
dioxide emissions.
● The second largest proportion of other compounds by 49% of nitrogen oxides, 36% of particulate
matter and 18% of total traffic carbon emissions
➢ The air emissions during operation are measured on the basis of traffic volume calculations, taking
into account the expected traffic volumes in the tunnel train and the probably altered situation on the
Helsinki-Tallinn ferries as a result of the train connection
Environmental Risk

7. Soil - bedrock - seabed
➢ Impacts on the soil may also occur in the surrounding station areas, the artificial island
and the island connecting to the railway
➢ The tunnel construction will create fracture zones in the bedrock, and those areas will
need tunnel strengthening and compacting.
➢ The concentrations of harmful substances on coarse erosion beds (sand, gravel, stone)
are small, accordingly. Concentrations can however be elevated with heavy traffic near
shipping lanes.
★ Remotely operated diving cameras (ROVs) and methods of geophysical calculation
are used to locate unexploded ordnances and old chemical weapons
Environmental Risk

8. Underwater nature and fauna
➢ The possible impacts of building
on groundwater can be seen as
flora changes in soil areas such
as a result, for example, of drying
and thus as changes in living
conditions of animals.
➢ The impacts of this will be
discussed on the breeding and
resting areas of species
protected by the EU Habitats
Directive.
Environmental Risk

9. Social Risk
Employment
● Increased employment level
● Working in another city and
construction
Consequences
● Higher GDP and economic growth
● Decreased amount of government
spending
Nationality Amount of employees Percentage
Finnish 18 750 60 %
Estonian 6 250 20 %
Other countries 6 250 20 %

10. Social Risk
Increased house prices
➢ Better transportation and accessibility
➢ Housing becomes unaffordable
➢ Increase in rents
➢ More debt
➢ Macroeconomic instability

11. Human health and living conditions
➢ Harmful emissions being released into atmosphere
➢ Loud voice from traffic and construction
Social Risk

12. Strategic Risk
Strategic risk at its core, focuses on the economic value of the business itself.
We shall be benchmarking as a way to analyze consistency and verify FinEst
Bays’ strategic objectives
The Channel Tunnel – would be an ideal benchmarking example for a tunnel with
railway and shuttle service for cars and trucks
The area we shall be considering will be the basic assumptions for the viability of
FinEst Bay Area Tunnel project. This will be the traffic flow; tunnel build and
funding.

13. Strategic Risk
Traffic Flow
➢ Forecast for passenger and freight highly
overstated
➢ Market share gain from existing ferry service did
not materialize
➢ strong competitive response of the ferry
companies as well as emergence of low-cost
airlines
➢ Financial viability of FinEst Bay tunnel called into
question
What the benchmarking of passenger and freight with the Channel tunnel has shown is that
the risk is mainly related to the forecast and actual traffic flows. Therefore, careful
consideration needs to be made to competitive position, price sensitivities and customer
preferences.
* 5 years after launch

14. Strategic Risk
➢ Schedule of completion of 66 months,
in actuality it took 78 months for
completion and opening
➢ Cost overruns required the need to
raise more capital and a year of lost
revenue
➢ The overall cost overrun for the tunnel
build was 122%
What can be learned from the Channel Tunnel is that the financial risk of
construction may over run thus require further financing and so prudent to
make consideration for the macroeconomic environment of interest rates and
in particular inflation.
Tunnel Build

15. Project funding
* in 1994 values
➢ Original Channel tunnel investment of € 7.5 billion fell
considerably short of the actual required tunnel
investment €15 billion
➢ Original debt negotiated at high interest rates therefore
cost of private finance became itself one of the main
risk
➢ Construction over run therefore a year of lost revenue
and the need to raise more capital at high financing
cost.
➢ Over estimation of traffic flow thus loss in projected
revenue
➢ Finest Bay Political risk - Questions will be raised
regarding the high level of investment from china in this
European project
Large infrastructure projects are notorious for going over their stated budgets and so
careful considerations of the potential financial risks needs to be addressed as well as
Political risks
Strategic Risks

16. Conclusions
● The ability to manage significant risks effectively is an increasingly critical success factor in all
organisations
● We believed what was missing from FinEst Bay literature was the different risk areas and how they
would attempt to mitigate them. This would have made a stronger case for their project
● By benchmarking with other similar projects would allow them to learn from the successes and
failures of others
● Through benchmarking FinEst Bay would identify different areas of risk to be able to develop a
successful risk management strategy.

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