Learning from risks: A tool for post-project risk assessment

Risk management (RM) comprises of risk identification, risk analysis, response planning, monitoring and action planning tasks that are carried out throughout the life cycle of a project in order to ensure that project objectives are met. Although the methodological aspects of RM are well-defined, the philosophical background is rather vague. In this paper, a learning-based approach is proposed. In order to implement this approach in practice, a tool has been developed to facilitate construction of a lessons learned database that contains risk-related information and risk assessment throughout the life cycle of a project. The tool is tested on a real construction project. The case study findings demonstrate that it can be used for storing as well as updating risk-related information and finally, carrying out a post-project appraisal. The major weaknesses of the tool are identified as, subjectivity of the risk rating process and unwillingness of people to enter information about reasons of failure.

The effects of pre- and postnatal depression in fathers: a natural experiment comparing the effects of exposure to depression on offspring

Background: Depression in fathers in the postnatal period is associated with an increased risk of behavioural problems in their offspring, particularly for boys. The aim of this study was to examine for differential effects of depression in fathers on children's subsequent psychological functioning via a natural experiment comparing prenatal and postnatal exposure. Methods:In a longitudinal population cohort study (the Avon Longitudinal Study of Parents and Children (ALSPAC)) we examined the associations between depression in fathers measured in the prenatal and postnatal period (measured using the Edinburgh Postnatal Depression Scale), and later behavioural/emotional and psychiatric problems in their children, assessed at ages 31/2 and 7 years. Results: Children whose fathers were depressed in both the prenatal and postnatal periods had the highest risks of subsequent psychopathology, measured by total problems at age 31/2 years (Odds Ratio 3.55; 95% confidence interval 2.07, 6.08) and psychiatric diagnosis at age 7 years (OR 2.54; 1.19, 5.41). Few differences emerged when prenatal and postnatal depression exposure were directly compared, but when compared to fathers who were not depressed, boys whose fathers had postnatal depression only had higher rates of conduct problems aged 31/2 years (OR 2.14; 1.22, 3.72) whereas sons of the prenatal group did not (OR 1.41; .75, 2.65). These associations changed little when controlling for maternal depression and other potential confounding factors. Conclusions: The findings of this study suggest that the increased risk of later conduct problems, seen particularly in the sons of depressed fathers, maybe partly mediated through environmental means. In addition, children whose fathers are more chronically depressed appear to be at a higher risk of emotional and behavioural problems. Efforts to identify the precise mechanisms by which transmission of risk may occur should be encouraged to enable the development of focused interventions to mitigate risks for young children.

Interpreting information about medication side effects: differences in risk perception and intention to comply when medicines are prescribed for adults or young children

This study investigates whether, and how, people's perception of risk and intended health behaviours are affected by whether a medicine is prescribed for themselves or for a young child. The question is relevant to the issue of whether it is beneficial to produce medicines information that is tailored to particular subgroups of the population, such as parents of young children. In the experiment, participants read scenarios which referred either to themselves or their (imagined) 1-year-old child, and were required to make a number of risk judgements. The results showed that both parents and non-parents were less satisfied, perceived side effects to be more severe and more likely to occur, risk to health to be higher, and said that they would be less likely to take (or give) the medicine when the recipient was the child. On the basis of the findings, it is suggested that it may well be beneficial to tailor materials to broader classes of patient type.

Assessment of the food control system in the State of Kuwait

National food control systems are a key element in the protection of consumers from unsafe foods and from other fraudulent practices. International guidance is available and provides a framework for enhancing national systems. However, it is recognized that before reaching decisions on the necessary improvements to a national system, an analysis is required of the current state of key elements in the present system. This paper provides such an analysis for the State of Kuwait. The fragmented nature of the food control system is described. Four key elements of the Kuwaiti system are analyzed: the legal framework, the administrative structures, the enforcement activity and the provision of education and training. It is noted that the country has a dependence on imported foods and that the present national food control system is largely based on an historic approach to food sampling at the point of import and is unsustainable. The paper recommends a more coordinated approach to food safety control in Kuwait with a significant increase in the use of risk analysis methods to target enforcement.

Risk pricing practices in finance, insurance and construction

A review of current risk pricing practices in the financial, insurance and construction sectors is conducted through a comprehensive literature review. The purpose was to inform a study on risk and price in the tendering processes of contractors: specifically, how contractors take account of risk when they are calculating their bids for construction work. The reference to mainstream literature was in view of construction management research as a field of application rather than a fundamental academic discipline. Analytical models are used for risk pricing in the financial sector. Certain mathematical laws and principles of insurance are used to price risk in the insurance sector. construction contractors and practitioners are described to traditionally price allowances for project risk using mechanisms such as intuition and experience. Project risk analysis models have proliferated in recent years. However, they are rarely used because of problems practitioners face when confronted with them. A discussion of practices across the three sectors shows that the construction industry does not approach risk according to the sophisticated mechanisms of the two other sectors. This is not a poor situation in itself. However, knowledge transfer from finance and insurance can help construction practitioners. But also, formal risk models for contractors should be informed by the commercial exigencies and unique characteristics of the construction sector.

An experimental approach to project risk identification and prioritization

One of the aims of a broad ethnographic study into how the apportionment of risk influences pricing levels of contactors was to ascertain the significant risks affecting contractors in Ghana, and their impact on prices. To do this, in the context of contractors, the difference between expected and realized return on a project is the key dependent variable examined using documentary analyses and semi-structured interviews. Most work in this has focused on identifying and prioritising risks using relative importance indices generated from the analysis of questionnaire survey responses. However, this approach may be argued to constitute perceptions rather than direct measures of the project risk. Here, instead, project risk is investigated by examining two measures of the same quantity; one ‘before’ and one ‘after’ construction of a project has taken place. Risks events are identified by ascertaining the independent variables causing deviations between expected and actual rates of return. Risk impact is then measured by ascertaining additions or reductions to expected costs due to the occurrence of risk events. So far, data from eight substantially complete building projects indicates that consultants’ inefficiency, payment delays, subcontractor-related problems and changes in macroeconomic factors are significant risks affecting contractors in Ghana.

The underlying return generating factors for REIT returns: an application of independent component analysis

Multi-factor approaches to analysis of real estate returns have, since the pioneering work of Chan, Hendershott and Sanders (1990), emphasised a macro-variables approach in preference to the latent factor approach that formed the original basis of the arbitrage pricing theory. With increasing use of high frequency data and trading strategies and with a growing emphasis on the risks of extreme events, the macro-variable procedure has some deficiencies. This paper explores a third way, with the use of an alternative to the standard principal components approach – independent components analysis (ICA). ICA seeks higher moment independence and maximises in relation to a chosen risk parameter. We apply an ICA based on kurtosis maximisation to weekly US REIT data using a kurtosis maximising algorithm. The results show that ICA is successful in capturing the kurtosis characteristics of REIT returns, offering possibilities for the development of risk management strategies that are sensitive to extreme events and tail distributions.

Different risk measures: different portfolio compositions?

Traditionally, the measure of risk used in portfolio optimisation models is the variance. However, alternative measures of risk have many theoretical and practical advantages and it is peculiar therefore that they are not used more frequently. This may be because of the difficulty in deciding which measure of risk is best and any attempt to compare different risk measures may be a futile exercise until a common risk measure can be identified. To overcome this, another approach is considered, comparing the portfolio holdings produced by different risk measures, rather than the risk return trade-off. In this way we can see whether the risk measures used produce asset allocations that are essentially the same or very different. The results indicate that the portfolio compositions produced by different risk measures vary quite markedly from measure to measure. These findings have a practical consequence for the investor or fund manager because they suggest that the choice of model depends very much on the individual’s attitude to risk rather than any theoretical and/or practical advantages of one model over another.

Towards an integrated script for risk and value management: insights from the dramaturgical metaphor

It is contended that the current conceptual distinction between risk management and value management is unsustainable. The origins of the two traditions are reviewed and critiqued from a postmodernist perspective. It is concluded that they differ primarily in terms of their rhetoric, rather than their substantive content. Insights into the current practice of risk and value management are provided by considering their enactment in terms of ‘performance’. The scripts for such performances are seen to be provided by the accepted methodologies which determine the language to be used and the roles to be acted out. A coherent integrated script for risk and value management can be provided by the methodology known as strategic choice, which replaces the language of ‘risk’ and ‘value’ with that of ‘uncertainty’. The benefits of adopting this alternative script are illustrated through six case studies.

An extreme value theory approach to calculating minimum capital risk requirements

This paper investigates the frequency of extreme events for three LIFFE futures contracts for the calculation of minimum capital risk requirements (MCRRs). We propose a semiparametric approach where the tails are modelled by the Generalized Pareto Distribution and smaller risks are captured by the empirical distribution function. We compare the capital requirements form this approach with those calculated from the unconditional density and from a conditional density - a GARCH(1,1) model. Our primary finding is that both in-sample and for a hold-out sample, our extreme value approach yields superior results than either of the other two models which do not explicitly model the tails of the return distribution. Since the use of these internal models will be permitted under the EC-CAD II, they could be widely adopted in the near future for determining capital adequacies. Hence, close scrutiny of competing models is required to avoid a potentially costly misallocation capital resources while at the same time ensuring the safety of the financial system.

Risk management and the corporate real estate portfolio

In a global business economy, firms have a broad range of corporate real estate needs. During the past decade, multiple strategies and tactics have emerged in the corporate real estate community for meeting those needs. We propose here a framework for analysing and prioritising the various types of risk inherent in corporate real estate decisions. From a business strategy perspective, corporate real estate must serve needs beyond the simple one of shelter for the workforce and production process. Certain uses are strategic in that they allow access to externalities, embody the business strategy, or provide entrée to new markets. Other uses may be tactical, in that they arise from business activities of relatively short duration or provide an opportunity to pre-empt competitors. Still other corporate real estate uses can be considered “core” to the existence of the business enterprise. These might be special use properties or may be generic buildings that have become embodiments of the organisation’s culture. We argue that a multi-dimensional matrix approach organised around three broad themes and nine sub-categories allow the decision-maker to organise and evaluate choices with an acceptable degree of rigor and thoroughness. The three broad themes are Use (divided into Core, Cyclical or Casual) – Asset Type (which can be Strategic, Specialty or Generic) and Market Environment (which ranges from Mature Domestic to Emerging Economy). Proper understanding of each of these groupings brings critical variables to the fore and allows for efficient resource allocation and enhanced risk management.

Exploring behavioural change through an agent-oriented system dynamics model: the use of personal protective equipment among pesticide applicators in Colombia

The misuse of Personal Protective Equipment results in health risk among smallholders in developing countries, and education is often proposed to promote safer practices. However, evidence point to limited effects of education. This paper presents a System Dynamics model which allows the identification of risk-minimizing policies for behavioural change. The model is based on the IAC framework and survey data. It represents farmers' decision-making from an agent-oriented standpoint. The most successful intervention strategy was the one which intervened in the long term, targeted key stocks in the systems and was diversified. However, the results suggest that, under these conditions, no policy is able to trigger a self sustaining behavioural change. Two implementation approaches were suggested by experts. One, based on constant social control, corresponds to a change of the current model's parameters. The other, based on participation, would lead farmers to new thinking, i.e. changes in their decision-making structure.

Sector, region or function? A MAD reassessment of real estate diversification in Great Britain

This paper re-examines whether it is more advantageous in terms of risk reduction to diversify by sector or region by comparing the performance of the ‘conventional’ regional classification of the UK with one based on modern socio-economic criteria using a much larger real estate data set than any previous study and the MAD portfolio approach. The general conclusion of this analysis is that property market sectors still dominate regions, however defined and so should be the first level of analysis when developing a portfolio diversification strategy. This is in line with previous research. When the performance of Functional groups is compared with the ‘conventional’ administrative regions the results here show that, when functionally based, groupings can in some cases provide greater risk reduction. In addition the underlying characteristics of these functional groups may be much more insightful and acceptable to real estate portfolio managers in considering the assets that a portfolio might contain.