Foundations of risk analysis: a knowledge and decision-oriented perspective

Introduction. In the context of economic, political, and market instability, an effective business organization is based on modern project management approaches that combine and take into account various aspects, including economic analysis, risk assessment, and business ethics. Innovative methods, approaches, mechanisms, and technologies improve and facilitate project development and management. The purpose of the paper is to identify modern approaches of project management based on economic analysis, risk assessment and business ethics for effective business organization in a dynamic environment. Results. In the paper modern approaches of management projects, that include an economic analysis, evaluation of risks and business-ethics and allow to promote efficiency of organization of business, are considered. It was found out that the program facilities of project management are concentrated in directions: a management, administration, resources and also system management projects, that combine budgeting, management, administration of processes, resources and terms. It was pointed on the fact that for companies that will realize several projects in a complex, a project portfolio design is recommended. It was found out that for implementation of analysis of co-ordination of project and objects of investing it is expedient to apply hieratical approach. It was found out that programmatic items for management risks can come forward as applications to the systems of the projects calendar planning, or by the particular programs. It was found out that for management modern projects social analysis and audit, and also observance of principles of digital business-ethics was necessary. Conclusion. The project approach is now an integral part of the business organization of modern companies, ensuring giving continuous development according to the market conditions. An effective project management system ensures the achievement of the strategic goals of the enterprises’ activities, their financial stability, and market position. However, in order to build a modern project management system, modern science-based approaches should be implemented, including economic analysis, risk assessment and management, as well as compliance with business ethics.

On the assessment of economic risk: factorial design versus Monte Carlo methods

The HIRA (Hazard Identification, Risk Assessment) method is a process of identifying hazards that occur in all company activities, then conducting a risk assessment of the hazards that occur. Introduction: Based on the initial survey conducted at PT. X, it was found that there were work accidents such as pinched hands, cuts, entanglement in processing machines which caused the risk of accidents. This research was conducted at PT.X in February-August 2021. Methods: This study used a descriptive qualitative method. This study analyzes the risk of work accidents using the HIRA (Hazard Identification, Risk Assessment) method which aims to identify hazards and conduct a risk assessment of these hazards. The research informants were 6 people consisting of 2 key informants and 4 main informants. Results: The results showed that there were 44 types of hazards from 8 work stations at PT. X. Among them, 16% have a small risk of harm (trivial), 38.6% have a tolerable risk, 34.1% have a moderate risk of harm, 4.5% have a substantial risk of harm, 6, 8% have an intolerable risk of harm. Conclusion: Risk analysis is a process by which hazards are identified and risks are estimated to assess the damage caused with the likelihood of damage occurring.

In Flanders and by extension in the whole world, accidents involving the transport of dangerous goods occur. Therefore, Flanders is developing a risk analysis and assessment system for the external human risks of transporting dangerous goods. The general outline of the system has now been established, based on a number of external research projects. The system allows to obtain a profile of the risks of serious accidents with the transportation of dangerous goods on roads, railways, waterways, pipelines and in ports. In brief, the risk analysis system consists of the following major elements: dividing of the transport routes into segments, determining the probability of a major accident per segment, determining the damage per segment, determining the risks for each segment and determining the risks per route. The next step was the developing of a risk assessment system to be able to decide whether or not the risk of the transport of dangerous goods is acceptable, whether or not extra safety measures have to be taken and which of the alternative routes is the most favourable one for external safety. The system consists of two major steps. First, the risk per segment is studied and if necessary, the ALARP principle is applied. Second, the risk of the total route is calculated for all alternative routes and is compared.

In this chapter, the importance of risk assessment in biodiesel-based economy is first discussed. The importance of risk analysis to identify the most promising production schemes is also discussed from an economic point of view. Next, a systematic framework for economic risk assessment of biodiesel production processes and its associated by-products is presented. The application of the framework is highlighted through the production of 1,2-propanediol and 1,3-propanediol as value-added products from glycerol, which are critically assessed in terms of its techno-economic performance through the estimation of economic indicators, net present value (NPV), and minimum selling price (MSP). The Monte Carlo method with Latin Hypercube Sampling (LHS) is used to propagate the market price and technical uncertainties to the economic indicator calculations and to quantify the respective economic risk. In order to decrease the economic risk, the integrated production of the product as a module added to the biodiesel plant was tested as an alternative scenario. Using the integrated concept of utilizing the waste glycerol stream in biodiesel plants contributes to the diversification of the product portfolio for vegetable oil-based biorefineries, and in turn improves cost-competitiveness and robustness against market price fluctuations. The developed generic framework can be applied to other biodiesel by-products to assess the potentials of obtaining value-added products from them. Finally, future perspectives and other approaches toward economic production of biodiesel with lower risks are highlighted. The framework proposed in this work is to provide some detailed perspectives to facilitate the economic risk analysis of biodiesel production for any given technology.

Time and cost outcomes of large and complex projects are forecast poorly across all sectors. Over recent years, Monte Carlo (MC) simulation has increasingly been adopted to forecast project time and cost outcomes more realistically. It is recognised that the simultaneous analysis of time and cost impacts makes sense as a modelling objective, due to the well-known relationship of time and money in projects. But most MC practitioners advocate the use of Schedule Risk Analysis (SRA) feeding into Cost Risk Analysis (CRA) because they believe it is too hard to perform Integrated Cost & Schedule Risk Analysis (IRA) realistically. This chapter elaborates an IRA methodology that produces realistic forecasts without relying on questionable assumptions and enables identification and ranking of all sources of cost uncertainty for risk optimisation as part of the process. It also describes an extension of IRA methodology to include assessment of the assets produced by the project as well as the project itself, thus enabling the analysis of business risks as well as project risks.

The urgency of the issue under study stems from the incompleteness of the regulatory legal definition of concepts and the legal regime for new objects of digital economy or even complete absence of this definition, as well as the need to determine the effects of digital technologies impact on legal and economic relations with the participation of entrepreneurs. The purpose of research is to identify and reveal general trends in legal and economic risks for entrepreneurs during the period of digital economy formation. Research methods of this issue are formal legal analysis and synthesis, which provide a comprehensive review of legal and economic risks’ interaction in the activities of entrepreneurs. Results: the article describes general trends of legal and economic risks’ impact on business entities. It reveals the multidirectional influence of digital technologies on legal, economic and other risks and justifies the necessity of developing a new toolkit for identifying and analyzing risks both at the state level and by individual entrepreneurs. The data of the article could be useful for experts in jurisprudence, economics, risk management, and for those involved in law-making activity.

A risk analysis approach emphasizes a shared responsibility for communication about food safety issues by all interested parties including government regulatory officials, industry, consumers, and academics. The three components of risk analysis are risk management, risk assessment, and risk communication. This chapter discusses the use of a risk analysis framework within a food safety context with emphasis on microbiological (biological) hazards, how risk analysis has been implemented in U.S. regulatory agencies and international organizations, and future needs to strengthen the use of risk analysis to help solve food safety issues. Risk analysis requires the interaction of individuals with diverse skills and perspectives, including expertise in communication, coordination, project management, scientific knowledge, and skills in data analysis and modeling. To efficiently allocate resources to address food safety issues, it is vital to establish annual food safety risk management priorities. Risk analysis is emerging as a public health tool that promises to provide a sound scientific basis for developing national and international standards and guidelines for food safety and for supporting risk-based policies and practices to prevent food-borne illness.

Schedule risk and cost risk analyses use statistical techniques to predict a level of confidence in meeting a program’s completion date and cost. This paper describes how to interpret key Schedule Risk Analysis (SRA) and Cost Risk Analysis (CRA) results to determine the likelihood that the program completion dates are met, how much management reserve (MR) is needed to provide the acceptable certainty of completion by a specific date, and the risks and activities that are most likely to delay or add cost to a project. The combined process is often called a Schedule/Cost Uncertainty and Risk Analysis or “SCURA.”

The probability of occurring emergency situations increases in conditions of severe climate of the Arctic. Therefore, addressing the problems related to the risk assessment of accidents at oil and gas facilities in the Arctic zones based on acceptable risk criteria is of particular importance. Uncontrollable development of emergency situations is followed by emission of a significant amount of oil products and constitutes serious ecological danger, and also can lead to considerable destructions and death of people resulted from fire and explosion. Therefore, the goal of the study is development of the methods for analysis and assessment of the risk of accidents in reservoirs and gas pipelines at low temperatures to increase the industrial safety of hazardous production facilities operating in conditions of the Arctic North. The results of brittle fracture analysis and accident risk assessment for reservoir and gas pipeline under arctic climatic conditions are presented. Statistical data processing of accidents allowed us to determine the rupture sources, develop a “fault tree” of brittle fracture of reservoirs, “event trees” of reservoir explosion and gas outflow from a gas pipeline, with allowance for the frequency of scenarios for quantitative risk assessment. Currently the probabilistic approach is considered one of the most promising. Accident statistics and experience of previous risk analyses can provide a useful contribution to the process of hazard identification. We focus on the scenario approach to the problems of hazard identification and assess the probability (frequency) of emergencies proceeding from the analysis and systematization of the statistical data on the accidents on reservoirs and gas pipelines at low ambient temperatures using the “event trees” and “fault trees” which provide determination of the most critical scenario and expected risk from accidents. Thus, risk assessment of accidents at hazardous production facilities in the Arctic zone using criteria of acceptable risk will allow estimation of hazards with unacceptable level of risk and development of recommendations and measures to reduce them.

A key feature of risk analysis is that risk assessment and risk management should be functionally separated. However, the usefulness of a risk assessment may be limited if the output is not designed to help with risk management decisions. The COMRISK project investigated the communication between risk assessors and risk managers. The overall goal of the project was to identify current practices and challenges in communication between risk assessors and risk managers during the risk analysis process, and thus increase and improve the understanding and the quality of the communication between them. Specific actions to achieve this aim included reviewing of historical food safety cases, analysing risk assessment requests, identifying communication guiding documents, including legislation and agreements, conducting semi-structured interviews with risk assessors and risk managers, and identifying tools for facilitating the communication between risk assessors and risk managers. It was concluded that the usefulness of a risk assessment is strongly dependent on well-defined and mutually recognised risk questions and that scarce or poor communication between risk assessors and risk managers is one of the major reasons when an output from risk assessment fails to support risk management. The communication between risk assessors and risk managers preceding the onset of the risk assessment, when the risk assessment requests with its risk questions are defined, is especially identified as one of the critical points to ensure a risk assessment that is fit for purpose. However, difficulties in understanding were also reported for the communication between risk assessors and risk managers during and after the risk assessment. Lack of communication is seldom a result of formal constraints or agreements nor can it be explained by a wish of the risk assessors or risk managers. Instead, perceived constraints or traditions appear to be possible underlying factors leading to scarce or poor communication between risk assessors and risk managers. It is essential that both risk assessors and risk managers acknowledge the crucial importance of communication between them while at the same time respect their different roles in a risk analysis.According to respondents, the best solution to facilitate the framing of the risk assessment questions isan open dialogue between risk assessors and risk managers to agree on the goal of the assessment and to build trust. Further, the interviewresults indicate that a formal systematic process may facilitate communication during the risk analysis. Where there is uncertainty, e.g due to data gaps or issues related to the methodology and models, it should be acknowledged and described properly by risk assessors to risk managers. Training of risk assessors and risk managers may improve the possibility of a timely and fit-for-purpose output.Such a training should give a deeper insight in the risk management process, give a better understanding of the risk managers role, and especially raise the awareness of the importance of the communication between risk assessors and risk managers.To improve the risk analysis process, it is also important that the risk assessor gets feedback regarding how risk assessments have met the needs of the risk managers.The present study also found that aspects of risk communication studied in this project are not extensively discussed in the guidance documents for risk analysis. More research is needed to identify the barriers for a fit for purpose communication.

The aim of the study. The development of decision-making algorithm for decisions on the social and medical protection of people in emergency situations based on risk analysis. Material and methods. The problems and conceptual provisions of risk assessment and decision-making, based on its results, are described concerning the social and medical protection of personnel of hazardous industries and the population in the event of an emergency situation (ES) in which the level of exposure to hazardous factors may exceed the established safety standards. The object of risk assessment and analysis are stochastic (probabilistic) effects of exposure to ES hazard factors. Their main features, which create complex problems in risk assessment and making decisions on protective measures, is the non-specific effects of the hazardous factors’ impact on human health and their possible latency. Results. The first step before decisions on the protective measures should be to identify a high-risk group among people affected by ES, based on the risk assessment. Three variants of decision-making for the high-risk group are considered: 1) financial compensation for risk, 2) medical measures for protecting health and 3) compensation for the realized damage to health. The requirements of the risk assessment methodology are formulated. Discussion. It is shown that the first option can not provide optimal and justified protection of the health and well-being of people in ES. Decisions on this protection are proposed to be based on a combination of options 2) and 3). The choice of the optimal combination depends on the specific situation and development of emergencies, on the success of implementing engineering and organizational protective measures aimed at preventing "doses" of exposure to people of hazardous factors of the emergency above the established safety limits and on the effectiveness and timeliness of medical protection. Conclusion. The choice of the option of making an effective decision on social and medical protection should be based on the detailed risk assessment from the exposure to hazardous factors, including risk assessment in economic indicators.

Distinguished Author Series articles are general, descriptive representations that summarize the state of the art in an area of technology by describing recent developments for readers who are not specialists in the topics discussed. Written by individuals recognized as experts in the area, these articles provide key references to more definitive work and present specific details only to illustrate the technology. Purpose: to inform the general readership of recent advances in various areas of petroleum engineering. Introduction Monte Carlo simulation is a statistics-based analysis tool that yields probability-vs.-value relationships for key parameters, including oil and gas reserves, capital exposure, and various economic yardsticks, such as net present value (NPV) and return on investment (ROI). These probability relationships help the user answer such questions as "What is the probability that the NPV of this prospect will exceed the target of $1,500,000?" or "How likely is it that the reserves added from this year's exploration program will fall short of our planned production? "Monte Carlo simulation is a part of risk analysis and is sometimes performed in conjunction with or as an alternative to decision [tree] analysis. Putting aside for the moment a description of Monte Carlo simulation, the method has attracted its share of critics over the years. Their comments include "I did this in FORTRAN in 1964, It just never caught on. "; "Why not just add or subtract 10% to the base case?" ; "The answer is whatever you want it to be. "; "The answer depends on who is doing the simulation. "; "Garbage in, garbage out. "; "You never have enough data" ; "A black box, hocus-pocus, that's all it is, "; and "It takes too long to run enough cases. "To some degree, the critics have been silenced by the evolution of virtually universal spreadsheet programs, much faster computers, and relatively simple software to run simulation and process data. Nonetheless, we will address some of the underlying concerns, but it is necessary to lay some foundation first. Our objectives are (1) to define Monte Carlo simulation in a more general context of risk and decision analysis; (2) to provide some specific applications, which can be interrelated; (3) to respond to some of the criticisms; (4) to offer some cautions about abuses of the method and recommend how to avoid the pitfalls; and (5) to predict what the future has in store. What Is Risk Analysis? Although the word "risk" occurs with great regularity these days in the petroleum literature, it has not always been fashionable. In its 60-pageSubject Index, the 1989 printing of the 1,727-page Petroleum Engineering Handbook contains just one reference to "risk [factor]" in an article about property evaluation. Among the numerous words and phrases associated with risk analysis are decision analysis, risk assessment, risk management, portfolio management and optimization, and strategic planning. In some contexts, these words are used only in a qualitative sense, but our focus is quantitative. Decision analysis, in its broadest form, includes problem identification, specification of objectives and constraints, modeling, uncertainty analysis, sensitivity analysis, and rules that lead to a decision. Generally speaking, risk analysis and assessment refer to the quantification of uncertainty, almost always in the context of possible investments. In the oil and gas business, although much of the analysis might pertain to reserve size, capital cost, production forecasting, and the like, the bottom line universally is monetary value. Risk management connotes a second stage, where the investors seek protection from unfavorable situations; i.e., they work to mitigate the risks. Thus, turnkey contracts, guarantees, insurance, locked-in prices, and hedges are instruments of risk management. A portfolio is an aggregation of investments. Portfolio managers mix their prospects to reduce collective risk and enhance ROI. Optimization is often taken as maximizing some measure of reward, such as NPV or profit-to-investment ratio, subject to constraints on risk. Strategic planning involves portfolio management but may include more intangible aspects of investments, such as the advantage of having a presence in a country.

The article is devoted to the study of the concept of corporate controlling and economic risks in the context of marketing management of integration enterprises and associations of joint-stock companies. It is aimed at analyzing the influence of corporate controlling on strategic management and the effectiveness of marketing processes in the conditions of a unified business structure. The study examines the main aspects of corporate controlling, such as strategic planning, monitoring the implementation of strategies, control over financial resources and evaluation of results, and also identifies key economic risks arising in marketing management. By considering these aspects, this study helps to understand the importance of effective corporate controlling management and risk minimization to achieve success in a complex business environment. The main concepts of corporate controlling and analysis of economic risks in the context of integration enterprises and associations of joint-stock companies are defined. The main aspects of corporate controlling are considered, in particular, strategic planning, monitoring the implementation of strategies, control over financial indicators and evaluation of results. An analysis of various economic risks that may arise in the context of the integration of enterprises and associations of joint-stock companies, such as financial, market, technological and other risks, was also carried out. Methods and tools for managing these risks in integrated structures of enterprises and associations of joint-stock companies were studied. It should be determined that the research is of great importance for practicing managers and management specialists, as well as for scientists who are interested in the issues of effective management of corporate structures and risk minimization in the business environment. Keywords: corporate management, marketing management, integration associations, corporate enterprises, joint-stock companies, economic risks, corporate controlling.

Maritime container supply chains (MCSCs) is exposed to various risks arising from both internal operations and the external environment, and the increasing complexity of the modern global logistics system makes the situation even worse, thus causing a significant challenge to the effective risk management of MCSCs. However, systematic studies on this topic are relatively few. In view of this, this study aims to explore and analyse various MCSC risks, develop suitable risk assessment methods, and evaluate the overall performance of MCSCs from a systematic perspective, so as to ensure the safety, reliability, and resilience of MCSCs. This research starts with the identification and classification of all possible risk factors that may be involved in an MCSC based on a comprehensive literature review, and the research results are further validated through a Delphi expert survey. The identified risk factors are then analysed, screened, and assessed in detail. The novelty of this study lies not only on the risk assessment of MCSCs under an uncertain environment from a supply chain level but also on the consideration of the impact of risk condition of each individual MCSC on the overall performance of the entire container supply network. The research results will provide useful insights and valuable information for both researchers and practitioners on the risk analysis and assessment of MCSCs, which is beneficial to different types of stakeholders involved in the maritime shipping industry. The work is also able to provide a theoretical foundation for risk-based decision making and shipping route optimisation in further work. Although the risk assessment methods are presented on the basis of the specific context in MCSCs, it is believed that, with domain-specific knowledge and data, they can also be tailored for a wide range of applications to evaluate the reliability and performance of other supply chain systems, especially where a high level of uncertainty is involved.