A model for measuring distruption risk in the prefabrication supply chain

Use of prefabrication in construction projects is increasing due to the benefits in cost, time, quality, and safety. However, utilizing prefabrication introduces uncertainties inherent with the supply chain of the process. These uncertainties, if not managed, can disrupt the prefabrication process and result in schedule delays and cost overruns. This study proposes a model to measure disruption risks in the prefabrication process. The model was used in measuring the disruption risks of prefabrication of headwalls in patients’ rooms for a healthcare project as a pilot study. The risk model could successfully identify the disruption risks originating anywhere in the supply chain based on input information such as required material quantity, batch sizes of material deliveries, production rates, and batch sizes of transporting the headwall units. Using the model, the project team identified two uncertainties that could lead to possible disruptions: the start of the prefabrication processes and the required production rate to meet the on-site schedule. This is a first step to developing a risk exposure model that can prove valuable to the risk managers to analyse and manage the impact of disruptions. This will help the risk managers in making informed decisions about where to focus their limited resources.

Power law bond price and yield approximation

PurposeThis paper determines a simple transformation that nearly linearizes the bond price formula. The transformed price can be used to derive a highly accurate approximation of the change in a bond price resulting from a change in interest rates.Design/methodology/approachA logarithmic transformation exactly linearizes the price function for a zero coupon bond and a reciprocal transformation exactly linearizes the price function for a perpetuity. A power law transformation combines aspects of both types of transformations and provides a superior approximation of the bond price sensitivity for both short-term and long-term bonds.FindingsIt is demonstrated that the new formula, based on power-law transformation, is a much better approximation than either the traditional duration-convexity approximation and the more recently developed approximations based on logarithmic transformation of the price function.Originality/valueThe new formula will be used by risk managers to perform stress-testing on bond portfolios. The new formula can easily be inverted, making it possible to relate the distribution of prices (which are observable in the market) to the distribution of yields (which are numerical solutions that are not directly observable).

US Flood risk management in changing times

The traditional regulatory and policy approach to flood risk in the US has been the optimization of benefits and costs, broadly mandated by federal policy. However, optimization may not be the best approach to flood risk management in light of the deep uncertainties we now face. A more incremental approach using a satisficing strategy may be. Flood risk is a function of the hydrologic factors that produce a hazard and the consequences of the hazard interfacing with the people and property exposed. Regretfully, both hydrologists and climatologists seem unable to provide the clairvoyant guidance needed by the water community facing major decisions on flood risk management in the coming years. As the seminal ‘Red Book’ noted, two things have become second nature to policy analysts and risk managers: absolute safety is unachievable, and it is necessary to distinguish between science and policy. The forcing elements and largest unknowns in determining risk rest with understanding the hydrologic factors involved in shaping the hazard.

Innovative Solutions for Disaster Early Warning and Alert Systems: A Literary Review

In different parts of the world, decision-makers and risk managers use specific and particularly complex disaster early warning and alert systems to protect people and their material goods from the harmful effects of various disasters in a timely, efficient and appropriate manner. However, concerning the level of scientific-technological and economic development of certain countries, such systems can differ in the many characteristics that make them more efficient in specific situations. Guided by this, the subject of the paper is reflected in the systematic identification, analysis, and classification of the best innovative solutions of early warning systems regarding their usability and efficiency. To find appropriate innovative solutions, it was performed a search of different electronic databases. The findings of this review showed that there is a huge potential for innovative solutions in the field of disaster early warning and alert systems.

Dark Triad Personality Traits and Selective Hedging

We study the relationship between risk managers’ dark triad personality traits (Machiavellianism, narcissism, and psychopathy) and their selective hedging activities. Using a primary survey of 412 professional risk managers, we find that managers with dark personality traits are more likely to engage in selective hedging than those without. This effect is particularly pronounced for older, male, and less experienced risk managers. The effect is also stronger in smaller firms, less centralized risk management departments, and family-owned firms.

Third-Party Monitoring and Risk Management: A Literature Review

Although risk management is prevalent in organizations, agency theory studies on contractual relationships in firms fail to address it. Risk reduction is mostly discussed within the context of monitoring, understood as insight into the activities of subordinates. Hence, this literature review discusses 18 main analytical studies on monitoring, reviewing whether they can be reinterpreted as depicting risk management, thereby allowing for the transfer of gained insights. Accordingly, only Meth, B. (1996). Reduction of outcome variance: optimality and incentives. Contemp. Account. Res. 13: 309–328 and Dürr, O., Nisch, M., and Rohlfing-Bastian, A. (2020). Incentives in optimized teams for projects with uncertain returns. Rev. Account. Stud. 25: 313–341, can be reinterpreted as such, bearing the following risk management implications: (1) risk management is vital for firms, as firm’s risk affects employee incentive contracts, firm’s utility, and optimal firm size; (2) risk attitudes of risk managers are crucial for designing incentive contracts, with incentives necessary for more (less) risk-averse agents to encourage risk-taking (risk reduction); and (3) risk management should be delegated as a task separate from other managerial activities. The other studies do not depict risk management. Therefore, many research subjects remain open, such as organizing risk management in hierarchies, delegating risk management as a task and incentivizing it when a firm’s outcome is unavailable for contracting, and establishing the connection between the performance measures and the risk of a firm.

The Differences in Mean and Volatility Shock Transmission among Bitcoin, Currencies from Developed Countries, and Currencies from Emerging Countries

This paper studied the mean and volatility transmission among Bitcoin as the most prominent cryptocurrency, exchange rates from developed countries/regions, and exchange rates from emerging countries/regions. Using daily returns between January 1, 2015, and December 31, 2018, and Bivariate VAR - Diagonal VECH models. The empirical results suggest there was no mean transmission between USD/EUR and USD/BTC. However, there was a unidirectional mean shock transmission link from USD/CNH, USD/MAD, and USD/IDR to USD/BTC. The results also suggested the existence of a bidirectional cross-volatility persistence link between bitcoin and all the exchange rates, except for USD/IDR and a bidirectional cross-volatility spillover link between USD/BTC and USD/CNH. A critical implication of these results is that they will be of use to investors, speculators, risk managers, and policymakers in understanding the degree of integration in terms of volatility and return among Bitcoin, currencies from developed, and currencies from emerging countries.

Creation of the System for Management of Technology-Related Risks at the Enterprise

A problem of creating a technology-related risks management system at an enterprise has been considered. On the basis of applying system approach and system modeling, a set of interrelated structural and process models was built for using them in the technology-related risks management system of an enterprise. By means of the suggested models and matrix projections between them, we can carry out the organizational analysis of a technology-related risks management system of an enterprise, which allows determining the functional workload and responsibility of structural elements of the created system. The calculation procedure of personnel in accordance with the established posts list has been developed for the technology-related risks management system of an enterprise, which would allow cutting administrative costs for the functions of risk managers.

Review article. Factors leading to the occurrence of flood fatalities: a systematic review of research papers published between 2010 and 2020

Floods kill several people every year in both developed and developing countries. The transfer of research findings from the academic community to practitioners, policy-makers and citizens may reduce the impact of floods on mortality. This systematic review analyzes 44 scientific articles extracted from WOS and SCOPUS databases written in English, published between 2010 and 2020, and focuses on flood fatalities. The first main finding of this review is the classification of drivers of flood mortality into two groups: the first group relates to the environment and the second group relates to the victims. The second main finding is the identification of strategies to practically cope with the identified drivers of flood fatalities. The main lacks of the review concern: a) the unavailability of papers based on flood fatality occurrence in developing countries and b) the absence of data focusing on people who have survived floods. This review amplifies useful findings, best practices, and lessons learned that can be useful for administrators, risk managers, and teachers of primary and secondary schools to mitigate the impact of future floods on human life.

Designing a Flood Storage Option on Agricultural Land: What Can Flood Risk Managers Learn from Drought Management?

The increasing probability of loss and damage to floods is a global concern. Countries are united by an urgent need to reduce flood risk to households, businesses, agricultural land, and infrastructure. As natural and engineered protection erodes with climate change and development pressures, new approaches to flood risk management delivered at the catchment scale that work with nature hold promise. One nature-based solution that aligns with this Special Issue on river flooding is the temporary storage of floodwaters on the floodplain. In many countries, this would involve controlled flooding inland low-lying agricultural land. Designing schemes that farmers and irrigation districts will adopt is essential. To inform future floodplain storage options, we review farm-centred drought management, specifically, agreements that transfer agricultural water to municipalities through fallowing in California, USA and an Australian farm exit scheme. These initiatives reveal underpinning principles around the need to: balance the multiple objectives of the parties, share the benefits and responsibilities, address local impacts and practical guidance on incentive design including the consideration of conditional participation requirements and responding to farmer and public preferences. In terms of funding there is opportunity for blended financing with flood-prone communities, insurers, and conservation charities.