Global risk management

Industries that deal with hazardous systems are faced with the task of managing a spectrum of risks within resource contraints. They have essentially two options that can be combined in a global risk-management strategy: insurance (loss sharing) and risk mitigation through technical and organizational measures. In this article, global risk-management strategies based on probabilistic risk analysis and its extension to include management factors are described. Some issues and solutions are illustrated through practical examples, drawn mostly from the recent research of the Industrial Engineering Risk Research Group at Stanford (the tiles of the U.S. Space Shuttle, offshore platforms, marine pipelines, and anesthesia in modern hospitals).     

Scope insensitivity in health risk reduction studies: A comparison of choice experiments and the contingent valuation method for valuing safer food

Scope insensitivity and embedding are fundamental concerns in contingent valuation studies for health risk reductions. Recently, choice experiments have increasingly been used to obtain contingent willingness to pay (WTP) estimates. We juxtapose the WTP estimates of a choice experiment (CE) to those of the contingent valuation method (CVM) for different health risk reductions and compare them in the extent of scope insensitivity and embedding. WTP using CVM is scope sensitive for single health risks, but embedding is observed for multiple disease risks. In contrast, WTP based on the CE is highly scope sensitive and convex in risk reduction levels.

Predicted risk perception and risk-taking behavior: The case of impaired driving

Research suggests an association between risk perception and risk-taking behavior in a variety of contexts. There is empirical evidence that perceived risk is generally biased and that perception of risk influences behavior. Perception of risk can be endogenous. It is therefore more appropriate to instrument risk perception. This article studies the perception of the risks associated with impaired driving and the relation between predicted risk perception and driving behavior. We survey a sample of license-holders, half of whom are drivers with a past conviction for impaired driving, the other half or control group without such conviction. Predicted perceptual biases are shown to influence actual driving behavior.

Empirical evidence of risk penalties for NTI Drugs

Journal of Risk and Uncertainty - Drug innovations can outpace regulatory drug approval processes designed to control risk, creating heterogeneous risks among approved drugs. This paper estimates a...     

The impact of risk attitude,uncertainty and disequilibria on optimal production and inventory

Summary The empirical facts seem to indicate that in real economies the effect of uncertainty tends to decrease production. The limitations of empirical investigations presented should be stressed: they were performed mainly on an aggregate level, they mainly refer to Austrian manufacturing, they rely heavily on questionnaires. Above all empirical investigation will never be able to decide normative questions or to explain the behavior in the general equilibrium. Nevertheless in the short run, given all the rigidities and disequilibria which exist, uncertainty tends to lower optimal production even in absence of risk aversion. Risk aversion becomes important for large, for once-for-all decisions, but it is not the only channel through which uncertainty changes decisions.Technological concavity created by concave marginal revenues or by convex marginal costs, marginal costs of uncertainty in disequilibria model or asymmetric costs of revisions of the preliminary decision are able to bias the decision downward in a real world economy without invokingPaper presented to the 2nd Conference on the Foundations of Risk and Utility (FUR), Venezia, 1984.     

Perception of own death risk

Individuals’ perception of their own road-traffic and overall mortality risks are examined in this paper. Perceived risk is compared with the objective risk of the respondents’ peers, i.e. their own gender and age group, and the results suggest that individuals’ risk perception of their own risk is biased. For road-traffic risk we obtain similar results to what have been found previously in the literature, overassessment and underassessment among low- and high-risk groups, respectively. For overall risk we find that all risk groups underestimate their risk. The results also indicate that men's risk bias is larger than women’s.

Electronic cigarette risk beliefs and usage after the vaping illness outbreak

Journal of Risk and Uncertainty - New national survey evidence on electronic cigarette (e-cigarette) risk beliefs indicates that people substantially overestimate the health risks posed by...     

The value of mortality risk reductions in Delhi,India

We interviewed commuters in Delhi, India, to estimate their willingness to pay (WTP) to reduce their risk of dying in road traffic accidents in three scenarios that mirror the circumstances under which traffic fatalities occur in Delhi. The WTP responses are internally valid: WTP increases with the size of the risk reduction, income, and exposure to road traffic risks, as measured by length of commute and whether the respondent drives a motorcycle. As a result, the value of a statistical life (VSL) varies across groups of beneficiaries. For the most highly-exposed individuals the VSL is about 150,000 Purchasing Power Parity (PPP) dollars.

Comparative Mixed Risk Aversion: Definition and Application to Self-Protection and Willingness to Pay

We analyze the optimal choices of agents with utility functions whose derivatives alternate in sign, an important class that includes most of the functions commonly used in economics and finance (Mixed Risk Aversion, MRA, Caballé and Pomansky, 1996). We propose a comparative mixed risk aversion definition for this class of utility functions, namely, More Risk Averse MRA, and provide a sufficient condition to compare individuals. We apply the model to optimal prevention and willingness to pay. More risk averse MRA agents spend less to reduce accident probabilities that are above 1/2. They spend more only when accident probabilities are below 1/2. Explanations in terms of risk premiums are provided. The results presented also allow for the presence of background risk.     

Examination of the Child Protective Services Decision-Making Context with Implications for Decision Support System Design

Abstract

The general perception of Child Protective Services (CPS) decision making is that it is inconsistent and prone to error. As a result, risk assessment instruments were developed to enable investigators to make better decisions. The present study uses a qualitative approach with an explicit theoretical framework pertinent to management information systems and decision support system design to examine the context in which investigators operate and make decisions. The resulting information can be used to determine design requirements that would improve the experience of using a risk assessment instrument that serves as a decision support system (DSS) for CPS investigators.     

Multivariate risk premiums

This paper develops characterizations of a risk premium and of the relation more risk averse, for multi-dimensional problems where the agent is exposed to an insurable and an uninsurable risk. We generalize and inter-relate results of Duncan (1977), Karni (1979), Kihlstrom et al. (1981), Malinvaud (1971), and Ross (1981) in deriving a local ordering of the risk aversion of agents with differing ordinal preferences.Earlier versions of this paper have been presented at seminars at New York University, the University of Alberta, and the University of British Columbia. We would like to acknowledge the helpful comments of participants at these presentations, in particular, Yakov Amihud, David Nachman, Joel Owen, Siegfried Schaible, Gordon Sick, and William Ziemba. All responsibility for errors and omissions resides with the authors.     

Validating a Behavioral Health Instrument for Adults: Exploratory Factor Analysis

ABSTRACT

Increasingly, social workers and behavioral health practitioners use assessment instruments to support service planning and to monitor progress. Following statewide implementation of the Adult Needs and Strengths Assessment (ANSA) to identify behavioral health symptoms, related functional challenges, risks, and strengths, this validation study explored the underlying structure of the instrument. An exploratory factor analysis used routinely collected information for Midwestern adults with diagnosed behavioral health disorders who participated in community-based services (N = 46,013). Five factors with adequate to good internal consistency (α = 0.733?0.880) emerged: personal recovery, trauma and stress related problems, substance use risks, self-sufficiency, and cultural-linguistic considerations. Validation of the ANSA supports use of the instrument to engage individuals and families, to plan services, to monitor progress, and to conduct research. Implications for social work education, supervision, and practice include the importance of understanding culture, holistic assessment, and services supporting personal recovery for individuals living with mental illness or substance use disorders. Confirmation of findings requires additional research.     

Models of economic planning under uncertainty: A selective survey and appraisal

Uncertainty and risk have played significant roles in policy making, at the micro and macro levels, from formulation of policy models to their actual implementation in several countries. The impact of risk aversion on policy making has differedm however, both in magnitude and intensity. Thus, for less developed countries with large commodity exports, stabilization policies have played a role as important as those for income growth and employment; for centrally planned economies, the investment cycles leading to large-scale divergences of actual from planned targets in strategic sectors have led policy makers to consider the need for building adequate safety margins in the planning process. Finally, for developed economies, the applied theory of indicative planning and decentralization has stressed the various informational gaps and competing risks that may impede an efficient and cooperative solution between private and public sectors. A selective survey and appraisal of the planning methods as they relate to risk and uncertainty is attempted here for less developed, centrally planned, and developed market economies.     

Cancer premiums and latency effects: A risk tradeoff approach for valuing reductions in fatal cancer risks

Many studies estimate individuals’ values for avoiding fatality risks; however, most value-of-statistical-life studies focus on accident-related deaths. Consequently, little is known about preferences for avoiding other fatal risks, such as cancer. Cancer may engender strong feelings of dread, leading to a “cancer premium,” but cancer latency periods may have the opposite effect. Using a national survey, we elicit relative preferences for avoiding fatal cancer and auto-accident risks. We find strong preferences for avoiding cancer risks. With a 5-year latency, they are valued roughly three times greater than immediate accident risks, declining to 50% greater for a 25-year latency.

Gender,risk and stereotypes

This paper reports results from an economic experiment where respondents are asked to make choices between risky outcomes for themselves and others. We investigate whether subjects’ own risk preferences and gender stereotypes are reflected in the predictions they make for the risk preferences of others and the way this occurs. When predicting other people’s risk preferences, the respondents tend to use a combination of their own risk preferences and stereotypes. Moreover, when making risky choices for others, the respondents generally use a combination of their own risk preferences and their average predicted risk preference of the targeted group.

A strong (Ross) characterization of multivariate risk aversion

Using the addition of uncorrelated noise as a natural definition of increasing risk for multivariate lotteries, I interpret risk aversion as the willingness to pay a (possibly random) vector premium in exchange for a reduction in multivariate risk. If no restriction is placed on the sign of any co-ordinate of the vector premium then (as was the case in Kihlstrom and Mirman's (1974) analysis) only pairs of expected utility maximizers with thesame ordinal preferences for outcomes can be ranked in terms of their aversion to increasing risk. However, if we restrict the premium to be a non-negative random variable then comparisons of aversion to increasing risk may be possible between expected utility maximizers withdistinct ordinal preferences for outcomes. The relationship between their utility functions is precisely the multi-dimensional analog of Ross's (1981)global condition forstrongly more risk averse.     

The evolving risks of the 21st century and their effective management

Risk management institutions can be reinvented in the 21st century in response to the changing nature of economic uncertainties and changing information technology. The COVID-19 pandemic and its effects on the economy provide an example of new kinds of uncertainties to be managed. National and international contracts should manage risks to claims on better-defined economic aggregates and prices of factors of human capital to make for better economic measurements and better risk management opportunities. The failures of international management of the COVID-19 pandemic, including failure to control the spread of misinformation, provide lessons for such new financial arrangements     

我国社会福利的发展取向:走进福利国家——基于风险社会理论的分析

风险社会理论是西方学者关于晚期现代性社会问题的一种思考。它虽然不能直接应用到我国语境中来,但能够促进我们对转型中的社会问题加以反思。从这个意义上,我国解决转型中的社会问题与社会风险的方略也与西方是不同的。当前中国正面临着多重社会风险,并且这些风险是不平等地分配的。要化解风险,需要我们建立制度化的社会福利制度,促进劳动力的去商品化、满足社会需要和维护社会公平。从长期来看,我们需要重返福利国家。     

A Study Exploring Risk Management Issues Among Volunteers in an Oncology Support Program

ABSTRACT. Risk management and challenges of volunteer roles in an oncology support program in Montreal, Canada, were explored using a phenomenological approach involving 65 service volunteers. Fourteen focus groups were held representing oncology services in the hospital and the wellness center. Self-reported questions were administered to assess the risks perceived by the volunteers. Findings revealed 4 major themes: comfort level, daily frustrations, risk and environmental issues, and suggestions. Suggestions included: better communication with staff, a safer health-related environment, and improved role-specific training to mitigate the risks. Additionally, for each group, 1 specific change was implemented during a 6-month period. Health care professionals should focus on job-training issues to address safety, comfort level, and role capacity. Future research should investigate an enhanced training curriculum with strategies to address concerns about risk management. Volunteers who are better equipped to perform their roles will be able to offer a higher quality of service to patients and families.     

Smoking Risks in Spain: Part II—Perceptions of Environmental Tobacco Smoke Externalities

Previous studies of smoking risk beliefs have focused almost exclusively on risks to the smoker. Using an original set of survey data from Spain, we examine the public's perceived risks from exposures to environmental tobacco smoke. The risk categories considered included lung cancer, heart disease, life expectancy loss, and low birth weight for children of smoking mothers. Risk beliefs were quite high, often dwarfing scientific estimates of the risk. The results are consistent with overestimation of risks from highly publicized, low probability events.