Playing with Fire

Post–World War II regimes for global problems are now dated and under stress. They need strengthening and updating. Controls are needed to prevent pandemics, limit climate change, and avoid nuclear war. New technologies require new norms and codes of conduct to guide expected behavior of governments, businesses, NGOs, and individuals. These must be developed against the background of the rise of authoritarian rivals. Russia seeks to undermine democratic powers by disinformation, China to surpass them via information and communications technology. This chapter proposes cross-culturally acceptable norms: respect for facts and evolving knowledge; cooperation; avoiding harm and minimizing risk; equity, sustainability, and participation; and accountability. Science and technology are ubiquitous in world affairs, linked to politics, economics, business, law, psychology, and culture. This synthesis deserves recognition as an academic discipline. The book ends on a fundamental ethical issue: what are people willing to do today to avoid future catastrophic damage?

Designing Bankers’ Pay: Using Contingent Capital to Reduce Risk-Shifting Incentives

Including contingent convertible bonds (coco) in the capital structure of a bank affects the sensitivity to risk of its equity-based compensation. Such risk-shifting incentives can be reduced if the coco bonds are well-designed. Similarly, we show that compensating executives with well-designed coco bonds can also reduce risk-shifting incentives. In practice, however, most coco bonds have characteristics that result in both stock and coco compensation having large sensitivities to changes in asset risk — equity-based compensation encourages executives to increase risk, coco compensation to reduce risk. We show that a pay package combining both stock and coco can practically eliminate risk-shifting incentives and that it can be implemented with a bank’s preexisting coco bonds.

Research on Route Optimization of Hazardous Materials Transportation Considering Risk Equity

The consequences of a hazmat accident can be catastrophic due to the characteristics of hazardous materials. Different from the models, which are constructed from the perspective of “government-carrier”, this paper considers the three objectives of the risk, the cost, and the compensation cost from the “government-carrier-public” perspective, so as to construct a route optimization model of hazmat transportation considering risk equity. Moreover, considering that the difference in regional emergency response time will significantly affect the risk, this research incorporates the emergency response time into the transportation risk assessment function, and realizes risk equity by minimizing the total compensation cost based on the difference in regional emergency response time. To solve the proposed model, a multi-objective genetic algorithm based on linear weighting is designed. The results obtained from the case study verify the necessity of considering the risk equity in the route optimization model of hazardous materials transportation and prove that the established model and algorithm can find an optimal route that meets the expectations of the government, the carrier, and the public.

How do the Risk Equity Techniques Affect on Intercity Road Network Accessibility? An Empirical Study

Due to existing risk on hazardous materials transportation, it is essential to avoid risk agglomeration over the specific edges which are frequently used on the intercity road network. Therefore, local and/or national authorities are dealing with distributing risk over the network while risk distribution may affect on the network accessibility. The aim of this study is to propose a procedure and develop mathematical models to distribute Hazmat transport risk, named risk equity, on the intercity road network and investigate the effects on the network accessibility. Accessibility is defined as dividing transport demand by distance, where the Min (Max) risk distribution technique is utilized for risk equity over the network. The effects have been investigated on a medium size of intercity road network in Guilan province, at the north of Iran. The proposed procedure and mathematical models have been run using experimental data including 46 nodes and 126 two-way edges including Hazmat Origin-Destination matrix. The results revealed that risk distribution technique has significant effects on network accessibility in which nodes’ accessibilities are statistically affected by risk equity models.