Risk terminologies, consequences & risk measurement 53,55
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Project Specific Risk- this affects only the project under consideration, and may arise from factors specific to the project or estimation error Competitive Risk- it’s the unanticipated effect on the cash flows in a project of competitor actions. Can be negative or positive Industry Risk- this is the unanticipated effect on the project cash flows of industry-wide shifts in Technology, changes in laws or in the price of commodity. Market Risk/ Macro Economic Factors- changes in interest rates, inflation rate, tax policies and the economy International Risk-changes in exchange rates and political scenarios
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Qualitative Analysis
Learning Objectives
Discuss the purposes of qualitative and quantitative analysis and characteristics of each.
Explain measurement scales and areas of qualitative analysis.
Discuss the assessment of broad loss exposures that may have a financial impact on the organization but may be difficult to quantify.
Learning Objectives
Explain the purpose, characteristics of quality loss data and the basic ways loss data can be organized for analysis.
Discuss risk mapping and how it is used as a key risk management tool.
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Learning Objective #1:
Discuss the purposes of qualitative and quantitative analysis and characteristics of each.
I. Qualitative Analysis
Purposes
The “what” analysis
Identification and evaluation of loss exposures that cannot be easily measured by traditional statistical or financial methods
Qualitative Analysis
Attempts to assign relative values to determine implications and scope of effects risks have on an organization; does not try to assign hard financial values to assets, expected losses and cost of controls
Helps management understand the potential impact of the organization’s ultimate risks on performance
Qualitative Analysis
Characteristics
Conducted using questionnaires, surveys, task forces, workshops and collaboration with a variety of internal and external knowledgeable groups related to an organization
Frequently addresses the following questions:
Should we do this?
What is the impact on the organization’s reputation or morale?
II. Quantitative Analysis
Purposes
The “how much” analysis
Attempts to accurately measure risks by using acceptable traditional methodologies to calculate relative numerical values
Quantitative Analysis
Characteristics
Conducted by using analysis of losses, exposures, costs, benefits and financial statements
Frequently addresses the following questions:
Can we do this?
What is the financial impact of this?
III. Reasons to use both Qualitative and Quantitative Analyses
Valid answers are needed, e.g., predicted losses, value of claims
Costs and benefits are primary factors of decision making
Non-monetary factors are part of the decision-making process, e.g., reputation, morale and citizenship
Learning Objective #2:
Explain measurement scales and areas of qualitative analysis.
II. Measurement Scales of Qualitative Risk Exposures
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Measurement Scales
Measurement scales depict relative values that are not easily quantified
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This document discusses risk management in major projects. It defines risk and outlines the risk management process. This includes identifying risks, analyzing their potential impacts, and developing responses to mitigate negative impacts and maximize positive ones. Key steps involve identifying risks, assessing their impacts, running simulations to evaluate scenarios, and interpreting the results, which can indicate the probability of costs and the most influential risks. Risk management tools and establishing risk owners are also covered.
Rm
Risk management involves considering social, economic, and political factors when making decisions to control risks. The risk manager takes a risk assessment and integrates it with relevant information from these domains. A risk manager prioritizes factors like how much risk can be controlled, the costs and social acceptability of control, and whether risk exposure is voluntary. Control techniques may include banning or limiting high-risk products based on de minimis risk levels or requiring best available technology. The outcomes of risk management depend on the individual decision makers involved.
Risk management
Risk management involves considering social, economic, and political factors when making decisions to control risks. The risk manager takes a risk assessment and integrates it with relevant information from these domains. A risk manager prioritizes factors like how much a risk can be controlled, the costs and social acceptability of control, and whether risk exposure is voluntary. Control techniques may include banning or limiting a product's use based on a minimum risk level, or using best available technology for manufacturing or use. The outcomes of risk management typically depend on the individual risk manager's personality, philosophy, and experiences.
Risk analysis in detail
This document discusses risk analysis and project appraisal. It defines risk and describes different types of risk such as liquidity risk, sovereign risk, and business risk. It discusses the causes of risk including political, business, economic, project, natural, financial, and crime-related risks. It describes systematic risk, which is inherent to the entire market, and unsystematic risk, which is unique to a specific company or industry. The document then discusses risk mitigation strategies including identifying risks, risk assessment, prioritizing risks, tracking risks, and implementing and monitoring risk mitigation programs. It provides examples of risk mitigation best practices and types of risk mitigation strategies such as acceptance, avoidance, control, and transfer.
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Collection of autonomous computers interconnected by a single technology is called computer network.
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Safety Integrity
Things can go wrong, so we need additional functionality
Safety Functions to reduce the risks
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design properties
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Strategic/Franchise Risk
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This document discusses hazard analysis, which allows employers to identify potential safety problems and corrective measures to improve safety. It describes several hazard analysis techniques including What-If analysis, checklists, Hazard and Operability Studies, and Failure Mode and Effects Analysis. What-If analysis involves experienced personnel brainstorming "What if?" questions to evaluate potential process hazards and failures. Checklists consist of yes/no questions about facility design and operation. Hazard and Operability Studies identify safety hazards and operational problems. While no technique can identify all accident scenarios, hazard analysis plays an important role in reducing industrial accidents when rigorously applied.
Process hazard analysis (pha)
A hazard is a situation that poses a level of threat to life, health, property, or environment. Most hazards are dormant or potential, with only a theoretical risk of harm; however, once a hazard becomes "active", it can create an emergency. Hazard and possibility interact together to create risk.
Identification of hazard risks is the first step in performing a risk assessment.
Hazard analysis
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Hazop Hazard and Operability Study
A Hazard and Operability (HAZOP) study is a structured and systematic examination of a planned or existing process or operation in order to identify and evaluate problems that may represent risks to personnel or equipment, or prevent efficient operation. A HAZOP is a qualitative technique based on guide-words and is carried out by a HAZOP team during a set of meetings
Hazop Hazard and Operability Study
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As far back as the 1960s, barcodes were used in industrial work environments. Some of the early implementations of barcodes included the ability identify rail,road,cars,etc……
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Risk terminologies, consequences & risk measurement 53,55
- 3. Expressed in a wide variety of ways based on what you are using risk for- financial risk, operational risk,etc Classical risk model in disaster response is: Risk= Probability X Impact
- 4. Project Specific Risk- this affects only the project under consideration, and may arise from factors specific to the project or estimation error Competitive Risk- it’s the unanticipated effect on the cash flows in a project of competitor actions. Can be negative or positive Industry Risk- this is the unanticipated effect on the project cash flows of industry-wide shifts in Technology, changes in laws or in the price of commodity. Market Risk/ Macro Economic Factors- changes in interest rates, inflation rate, tax policies and the economy International Risk-changes in exchange rates and political scenarios
- 5. It’s the outcome of an event on objectives Single event can generate range of consequences- positive or negative effect Initial consequences can also escalate through knock-on effects
- 6. Consequences may set the stage for either: o Future events, or o Vulnerability reduction through mitigation and preparedness
- 7. Identify risk goals and objectives Identify team members Identify the data and control flows Identify vulnerabilities and threats Risk rate individual items and calculate final Risk or Risk Score
- 9. THANK YOU