On the Risk Management and Risk Governance of Petroleum Operations in the Barents Sea Area

In this article, we discuss issues of risk management and risk governance with respect to petroleum operations in the Barents Sea area. We will focus on the decision problems related to whether or not to open the Barents Sea for petroleum activities in special vulnerable areas. We will explore to what extent the International Risk Governance Council risk governance framework provides valuable insights for and assistance to the decisionmaker and other stakeholders (including the industry and NGOs). The study covers issues related to risk assessment and appraisal, risk acceptance and tolerability, the use of the precautionary principle, risk perception, stakeholder involvement, risk communication, and risk management. The overall aim of the article is to point to areas where the risk governance could have been and can be improved for these and similar decision problems.     

Risk Assessment and Risk Governance of Liquefied Natural Gas Development in Gladstone,Australia

This article is a retrospective analysis of liquefied natural gas development (LNG) in Gladstone, Australia by using the structure of the risk governance framework developed by the International Risk Governance Council (IRGC). Since 2010 the port of Gladstone has undergone extensive expansion to facilitate the increasing coal export as well as the new development of three recently completed LNG facilities. Significant environmental and socio‐economic impacts and concerns have occurred as a result of these developments. The overall aim of the article, therefore, is to identify the risk governance deficits that arose and to formulate processes capable of improving similar decision‐making problems in the future. The structure of the IRGC framework is followed because it represents a broad analytical approach for considering risk assessment and risk governance in Gladstone in ways that include, but also go beyond, the risk approach of the ISO 31000:2009 standard that was employed at the time. The IRGC risk framework is argued to be a consistent and comprehensive risk governance framework that integrates scientific, economic, social, and cultural aspects and advocates the notion of inclusive risk governance through stakeholder communication and involvement. Key aspects related to risk preassessment, risk appraisal, risk tolerability and acceptability, risk management, and stakeholder communication and involvement are considered. The results indicate that the risk governance deficits include aspects related to (i) the risk matrix methodology, (ii) reflecting uncertainties, (iii) cumulative risks, (iv) the regulatory process, and (v) stakeholder communication and involvement.     

The Essential Elements of a Risk Governance Framework for Current and Future Nanotechnologies

Societies worldwide are investing considerable resources into the safe development and use of nanomaterials. Although each of these protective efforts is crucial for governing the risks of nanomaterials, they are insufficient in isolation. What is missing is a more integrative governance approach that goes beyond legislation. Development of this approach must be evidence based and involve key stakeholders to ensure acceptance by end users. The challenge is to develop a framework that coordinates the variety of actors involved in nanotechnology and civil society to facilitate consideration of the complex issues that occur in this rapidly evolving research and development area. Here, we propose three sets of essential elements required to generate an effective risk governance framework for nanomaterials. (1) Advanced tools to facilitate risk‐based decision making, including an assessment of the needs of users regarding risk assessment, mitigation, and transfer. (2) An integrated model of predicted human behavior and decision making concerning nanomaterial risks. (3) Legal and other (nano‐specific and general) regulatory requirements to ensure compliance and to stimulate proactive approaches to safety. The implementation of such an approach should facilitate and motivate good practice for the various stakeholders to allow the safe and sustainable future development of nanotechnology.     

CSR as Value Attunement within Governance Processes: Stakeholder Dialogue,Corporate Principles and Regulation

I argue that a governance perspective on corporate social responsibility (CSR) makes it possible to explain why the concept will always be under‐defined, is normative and thus political by nature, and is and should be difficult to measure. The perspective also makes it possible to understand the interaction between corporate values and stakeholders values. In processes of dialogue within governance systems and governance structures, changing insights into the principles of CSR can lead to regulation or its adjustment. Power is important in these dialogues. Principles are at least partly shaped within governance systems and governance structures, and they influence the outcomes of corporate policies. Changes within the regulatory framework could also lead to changes in the principles of CSR. Value attunement processes could lead to regulation, which again influences the governance structures and thus the power of stakeholders within the dialogue. The theoretical model provided helps to analyze why CSR is different in companies, cultures and academic traditions.     

An Integrated Framework for Environmental Multi‐Impact Spatial Risk Analysis

Quantitative risk analysis is being extensively employed to support policymakers and provides a strong conceptual framework for evaluating decision alternatives under uncertainty. Many problems involving environmental risks are, however, of a spatial nature, i.e., containing spatial impacts, spatial vulnerabilities, and spatial risk‐mitigation alternatives. Recent developments in multicriteria spatial analysis have enabled the assessment and aggregation of multiple impacts, supporting policymakers in spatial evaluation problems. However, recent attempts to conduct spatial multicriteria risk analysis have generally been weakly conceptualized, without adequate roots in quantitative risk analysis. Moreover, assessments of spatial risk often neglect the multidimensional nature of spatial impacts (e.g., social, economic, human) that are typically occurring in such decision problems. The aim of this article is therefore to suggest a conceptual quantitative framework for environmental multicriteria spatial risk analysis based on expected multi‐attribute utility theory. The framework proposes: (i) the formal assessment of multiple spatial impacts; (ii) the aggregation of these multiple spatial impacts; (iii) the assessment of spatial vulnerabilities and probabilities of occurrence of adverse events; (iv) the computation of spatial risks; (v) the assessment of spatial risk mitigation alternatives; and (vi) the design and comparison of spatial risk mitigation alternatives (e.g., reductions of vulnerabilities and/or impacts). We illustrate the use of the framework in practice with a case study based on a flood‐prone area in northern Italy.     

When Can Scientific Studies Promote Consensus Among Conflicting Stakeholders?

While scientific studies may help conflicting stakeholders come to agreement on a best management option or policy, often they do not. We review the factors affecting trust in the efficacy and objectivity of scientific studies in an analytical‐deliberative process where conflict is present, and show how they may be incorporated in an extension to the traditional Bayesian decision model. The extended framework considers stakeholders who differ in their prior beliefs regarding the probability of possible outcomes (in particular, whether a proposed technology is hazardous), differ in their valuations of these outcomes, and differ in their assessment of the ability of a proposed study to resolve the uncertainty in the outcomes and their hazards—as measured by their perceived false positive and false negative rates for the study. The Bayesian model predicts stakeholder‐specific preposterior probabilities of consensus, as well as pathways for increasing these probabilities, providing important insights into the value of scientific information in an analytic‐deliberative decision process where agreement is sought. It also helps to identify the interactions among perceived risk and benefit allocations, scientific beliefs, and trust in proposed scientific studies when determining whether a consensus can be achieved. The article provides examples to illustrate the method, including an adaptation of a recent decision analysis for managing the health risks of electromagnetic fields from high voltage transmission lines.     

Modeling Insurer‐Homeowner Interactions in Managing Natural Disaster Risk

The current system for managing natural disaster risk in the United States is problematic for both homeowners and insurers. Homeowners are often uninsured or underinsured against natural disaster losses, and typically do not invest in retrofits that can reduce losses. Insurers often do not want to insure against these losses, which are some of their biggest exposures and can cause an undesirably high chance of insolvency. There is a need to design an improved system that acknowledges the different perspectives of the stakeholders. In this article, we introduce a new modeling framework to help understand and manage the insurer's role in catastrophe risk management. The framework includes a new game‐theoretic optimization model of insurer decisions that interacts with a utility‐based homeowner decision model and is integrated with a regional catastrophe loss estimation model. Reinsurer and government roles are represented as bounds on the insurer‐insured interactions. We demonstrate the model for a full‐scale case study for hurricane risk to residential buildings in eastern North Carolina; present the results from the perspectives of all stakeholders—primary insurers, homeowners (insured and uninsured), and reinsurers; and examine the effect of key parameters on the results.     

Taking (and Sharing Power): How Boards of Directors Can Bring About Greater Fairness for Dependent Stakeholders

One of the ways in which scholars have sought to broaden the discussion of the social responsibilities of corporations and their managers is through the development of the stakeholder concept. The primacy of shareholder interests in corporate‐governance processes and managerial action is, however, a myth that justifies all sorts of managerial self‐interest seeking and exploitation of particular stakeholder groups. What makes this myth particularly problematic—from the standpoint of fairness and corporate governance—is that not all nonshareholder stakeholders are equally situated with regard to their ability to secure fair treatment. In this article, I explore the ethical dimensions of board responsibilities to dependent stakeholder groups by first describing the differences between shareholders and nonshareholder stakeholders with regard to risk, examining why dependent stakeholders (stakeholders with legitimate and urgent claims, but no power) are particularly important from the standpoint of stakeholder risk, and discussing how stakeholder consultation might provide a partial fix to such problems. I will conclude with proposals for how boards can more faithfully discharge their ethical responsibilities to dependent stakeholder groups, and in so doing facilitate stakeholder involvement in corporate governance in ways that promote fairness in organization–stakeholder relationships.     

Prioritizing Environmental Health Risks in the UAE

This article presents the results of a comparative environmental risk‐ranking exercise that was conducted in the United Arab Emirates (UAE) to inform a strategic planning process led by the Environment Agency‐Abu Dhabi (EAD). It represents the first national‐level application of a deliberative method for comparative risk ranking first published in this journal. The deliberative method involves a five‐stage process that includes quantitative risk assessment by experts and deliberations by groups of stakeholders. The project reported in this article considered 14 categories of environmental risks to health identified through discussions with EAD staff: ambient and indoor air pollution; drinking water contamination; coastal water pollution; soil and groundwater contamination; contamination of fruits, vegetables, and seafood; ambient noise; stratospheric ozone depletion; electromagnetic fields from power lines; health impacts from climate change; and exposure to hazardous substances in industrial, construction, and agricultural work environments. Results from workshops involving 73 stakeholders who met in five separate groups to rank these risks individually and collaboratively indicated strong consensus that outdoor and indoor air pollution are the highest priorities in the UAE. Each of the five groups rated these as being among the highest risks. All groups rated soil and groundwater contamination as being among the lowest risks. In surveys administered after the ranking exercises, participants indicated that the results of the process represented their concerns and approved of using the ranking results to inform policy decisions. The results ultimately shaped a strategic plan that is now being implemented.     

Using Probabilistic Terrorism Risk Modeling for Regulatory Benefit-Cost Analysis: Application to the Western Hemisphere Travel Initiative in the Land Environment

This article presents a framework for using probabilistic terrorism risk modeling in regulatory analysis. We demonstrate the framework with an example application involving a regulation under consideration, the Western Hemisphere Travel Initiative for the Land Environment, (WHTI‐L). First, we estimate annualized loss from terrorist attacks with the Risk Management Solutions (RMS) Probabilistic Terrorism Model. We then estimate the critical risk reduction, which is the risk‐reducing effectiveness of WHTI‐L needed for its benefit, in terms of reduced terrorism loss in the United States, to exceed its cost. Our analysis indicates that the critical risk reduction depends strongly not only on uncertainties in the terrorism risk level, but also on uncertainty in the cost of regulation and how casualties are monetized. For a terrorism risk level based on the RMS standard risk estimate, the baseline regulatory cost estimate for WHTI‐L, and a range of casualty cost estimates based on the willingness‐to‐pay approach, our estimate for the expected annualized loss from terrorism ranges from $2.7 billion to $5.2 billion. For this range in annualized loss, the critical risk reduction for WHTI‐L ranges from 7% to 13%. Basing results on a lower risk level that results in halving the annualized terrorism loss would double the critical risk reduction (14–26%), and basing the results on a higher risk level that results in a doubling of the annualized terrorism loss would cut the critical risk reduction in half (3.5–6.6%). Ideally, decisions about terrorism security regulations and policies would be informed by true benefit‐cost analyses in which the estimated benefits are compared to costs. Such analyses for terrorism security efforts face substantial impediments stemming from the great uncertainty in the terrorist threat and the very low recurrence interval for large attacks. Several approaches can be used to estimate how a terrorism security program or regulation reduces the distribution of risks it is intended to manage. But, continued research to develop additional tools and data is necessary to support application of these approaches. These include refinement of models and simulations, engagement of subject matter experts, implementation of program evaluation, and estimating the costs of casualties from terrorism events.     

Risk perception and post-formation governance in international joint ventures in Taiwan: The perspective of the foreign partner

This paper draws on a risk analysis framework in order to develop a systematic understanding of the risks perceived by partners, and to investigate the implications of risk perception for the configuration of control, in the post-formation governance of international joint ventures. The key variables in this framework consist of six situational factors which are considered as potential antecedents of perceived risk: conflict, opportunism, cultural difference, dependence, partner fit, and ownership share; partner's perception of risk; and post-formation governance as a set of outcome variables. The framework is tested using a sample of international joint ventures located in Taiwan. The findings show that conflicts between partners, opportunistic behavior by the local partner, cultural differences, and perceived partner misfit are related to foreign partners' risk perceptions. This study suggests that when foreign partners face likely performance and partnership risks after an IJV is established, they tend to resort to tighter post-formation governance measures in order to increase or maintain their confidence in their joint ventures.     

A Decision Framework for Managing Risk to Airports from Terrorist Attack

This article presents an asset‐level security risk management framework to assist stakeholders of critical assets with allocating limited budgets for enhancing their safety and security against terrorist attack. The proposed framework models the security system of an asset, considers various threat scenarios, and models the sequential decision framework of attackers during the attack. Its novel contributions are the introduction of the notion of partial neutralization of attackers by defenders, estimation of total loss from successful, partially successful, and unsuccessful actions of attackers at various stages of an attack, and inclusion of the effects of these losses on the choices made by terrorists at various stages of the attack. The application of the proposed method is demonstrated in an example dealing with security risk management of a U.S. commercial airport, in which a set of plausible threat scenarios and risk mitigation options are considered. It is found that a combination of providing blast‐resistant cargo containers and a video surveillance system on the airport perimeter fence is the best option based on minimum expected life‐cycle cost considering a 10‐year service period.     

Exploring Risk Judgments in a Trade Dispute Using Bayesian Networks

Bayesian networks (BNs) are graphical modeling tools that are generally recommended for exploring what‐if scenarios, visualizing systems and problems, and for communication between stakeholders during decision making. In this article, we investigate their potential for exploring different perspectives in trade disputes. To do so, we draw on a specific case study that was arbitrated by the World Trade Organization (WTO): the Australia‐New Zealand apples dispute. The dispute centered on disagreement about judgments contained within Australia's 2006 import risk analysis (IRA). We built a range of BNs of increasing complexity that modeled various approaches to undertaking IRAs, from the basic qualitative and semi‐quantitative risk analyses routinely performed in government agencies, to the more complex quantitative simulation undertaken by Australia in the apples dispute. We found the BNs useful for exploring disagreements under uncertainty because they are probabilistic and transparently represent steps in the analysis. Different scenarios and evidence can easily be entered. Specifically, we explore the sensitivity of the risk output to different judgments (particularly volume of trade). Thus, we explore how BNs could usefully aid WTO dispute settlement. We conclude that BNs are preferable to basic qualitative and semi‐quantitative risk analyses because they offer an accessible interface and are mathematically sound. However, most current BN modeling tools are limited compared with complex simulations, as was used in the 2006 apples IRA. Although complex simulations may be more accurate, they are a black box for stakeholders. BNs have the potential to be a transparent aid to complex decision making, but they are currently computationally limited. Recent technological software developments are promising.     

Risk management in a developing country context: improving decisions about point-of-use water treatment among the rural poor in Africa

More than 1 billion people, the vast majority of which live in the developing world, lack basic access to clean water for domestic use. For this reason, finding and promoting effective and sustainable solutions for the provision of reliable clean water in developing nations has become a focus of several public health and international development efforts. Even though several means of providing centrally located sources of clean water in developing communities exist, the severity and widespread nature of the water problem has led most development agencies and sanitation experts to strongly advocate the use of point-of-use treatment systems alongside whatever source of water people regularly use. In doing so, however, development practitioners have been careful to point out that any interventions or infrastructure regarding water safety and human health must also adhere to one of the central principles of international development: to facilitate more democratic and participatory models of decision making and governance. To this end, the research reported here focused on the development of a deliberative risk management framework for involving affected stakeholders in decisions about POU water treatment systems. This research, which was grounded in previous studies of structured decision making, took place in two rural villages in the East African nation of Tanzania.     

Integrating Stakeholder Mapping and Risk Scenarios to Improve Resilience of Cyber‐Physical‐Social Networks

The future of energy mobility involves networks of users, operators, organizations, vehicles, charging stations, communications, materials, transportation corridors, points of service, and so on. The integration of smart grids with plug‐in electric vehicle technologies has societal and commercial advantages that include improving grid stability, minimizing dependence on nonrenewable fuels, reducing vehicle emissions, and reducing the cost of electric vehicle ownership. However, ineffective or delayed participation of particular groups of stakeholders could disrupt industry plans and delay the desired outcomes. This article develops a framework to address enterprise resilience for two modes of disruptions—the first being the influence of scenarios on priorities and the second being the influence of multiple groups of stakeholders on priorities. The innovation of this study is to obtain the advantages of integrating two recent approaches: scenario‐based preferences modeling and stakeholder mapping. Public agencies, grid operators, plug‐in electric vehicle owners, and vehicle manufacturers are the four groups of stakeholders that are considered in this framework, along with the influence of four scenarios on priorities.     

A Multifactorial Risk Prioritization Framework for Foodborne Pathogens

We develop a prioritization framework for foodborne risks that considers public health impact as well as three other factors (market impact, consumer risk acceptance and perception, and social sensitivity). Canadian case studies are presented for six pathogen‐food combinations: Campylobacter spp. in chicken; Salmonella spp. in chicken and spinach; Escherichia coli O157 in spinach and beef; and Listeria monocytogenes in ready‐to‐eat meats. Public health impact is measured by disability‐adjusted life years and the cost of illness. Market impact is quantified by the economic importance of the domestic market. Likert‐type scales are used to capture consumer perception and acceptance of risk and social sensitivity to impacts on vulnerable consumer groups and industries. Risk ranking is facilitated through the development of a knowledge database presented in the format of info cards and the use of multicriteria decision analysis (MCDA) to aggregate the four factors. Three scenarios representing different stakeholders illustrate the use of MCDA to arrive at rankings of pathogen‐food combinations that reflect different criteria weights. The framework provides a flexible instrument to support policymakers in complex risk prioritization decision making when different stakeholder groups are involved and when multiple pathogen‐food combinations are compared.     

Shannon Entropy for Quantifying Uncertainty and Risk in Economic Disparity

The rise in economic disparity presents significant risks to global social order and the resilience of local communities. However, existing measurement science for economic disparity (e.g., the Gini coefficient) does not explicitly consider a probability distribution with information, deficiencies, and uncertainties associated with the underlying income distribution. This article introduces the quantification of Shannon entropy for income inequality across scales, including national‐, subnational‐, and city‐level data. The probabilistic principles of Shannon entropy provide a new interpretation for uncertainty and risk related to economic disparity. Entropy and information‐based conflict rise as world incomes converge. High‐entropy instances can resemble both happy and prosperous societies as well as a socialist–communist social structure. Low entropy signals high‐risk tipping points for anomaly and conflict detection with higher confidence. Finally, spatial–temporal entropy maps for U.S. cities offer a city risk profiling framework. The results show polarization of household incomes within and across Baltimore, Washington, DC, and San Francisco. Entropy produces reliable results at significantly reduced computational costs than Gini coefficients.     

Risk Modeling, Assessment, and Management of Lahar Flow Threat

The 1991 eruption of Mount Pinatubo in the Philippines is considered one of the most violent and destructive volcanic activities in the 20th century. Lahar is the Indonesian term for volcanic ash, and lahar flows resulting from the massive amount of volcanic materials deposited on the mountain's slope posed continued post-eruption threats to the surrounding areas, destroying lives, homes, agricultural products, and infrastructures. Risks of lahar flows were identified immediately after the eruption, with scientific data provided by the Philippine Institute of Volcanology, the U.S. Geological Survey, and other research institutions. However, competing political, economic, and social agendas subordinated the importance of scientific information to policy making. Using systemic risk analysis and management, this article addresses the issues of multiple objectives and the effective integration of scientific techniques into the decision-making process. It provides a modeling framework for identifying, prioritizing, and evaluating policies for managing risk. The major considerations are: (1) applying a holistic approach to risk analysis through hierarchical holographic modeling, (2) applying statistical methods to gain insight into the problem of uncertainty in risk assessment, (3) using multiobjective trade-off analysis to address the issue of multiple decisionmakers and stakeholders in the decision-making process, (4) using the conditional expected value of extreme events to complement and supplement the expected value in quantifying risk, and (5) assessing the impacts of multistage decisions. Numerical examples based on ex post data are formulated to illustrate applications to various problems. The resulting framework from this study can serve as a general baseline model for assessing and managing risks of natural disasters, which the Philippines' lead agency-the National Disaster Coordinating Council (NDCC)-and other related organizations can use for their decision-making processes.