Tag: handling risks

Risk managing the supply chain

The strategic importance of risk managing the supply chain

Risk managers should keep a handle on their supplier relationships as this can lead to significant gains.

The corporate risks posed by a potential supply chain failure are leading more risk managers to keep a close handle on their supplier relationships and they are finding, in some instances, that significant gains can be made in the process.

The latest spate of negative headlines about UK-based corporates that have been found wanting in their governance of suppliers or have suffered operational upheaval owing to a supply chain issue is driving this change.

Source: Strategic Risk

Insurance Act 2015

The legislation will introduce fundamental reforms, including key changes to the duty to make a fair presentation

When the Insurance Act 2015 comes into force in August 2016, it will introduce fundamental changes to UK insurance contract law. Risk managers will welcome the reforms and are being encouraged to prepare for the changes well in advance of next year. Airmic has urged the insurance market to implement the reforms as soon as possible and some insurers may be willing to apply the new rules to policies incepting or being renewed before August 2016. Read more >

 

Paris: Seine flood

Paris should prepare now for risk of a costly Seine flood

January 24, 2014, Organisation for Economic Co-operation and Development (OECD)

Quote press-release:

“24/01/2014 – A major flooding of the Seine River similar to the flood disaster of 1910 could affect up to 5 million residents in the greater Paris area and cause up to 30 billion euros worth of damage, according to a new OECD report. Economic growth, jobs and public finances could also be significantly affected.

The OECD Review on Flood Risk Management of the Seine River – commissioned by the Basin Organisation Seine Grands Lacs with the French Ministry of Ecology and Ile-de-France regional council – recommends that city officials work to raise risk awareness among citizens and businesses and improve the resilience of the metropolitan area to flood risks.

Recent floods in Europe and New York City’s Hurricane Sandy disaster in 2012 illustrated the vulnerability of today’s ever-denser cities to flooding and the need to adapt critical infrastructure systems to be able to cope with extreme weather events. The 1910 Paris flood took several weeks to subside.

“The impact on Paris of a major flood would be much greater today than a century ago, with serious economic and social consequences on top of the temporary disruption and material losses,” said Rolf Alter, Director of the OECD’s Public Governance and Territorial Development Directorate. “The better Paris prepares itself to manage this risk and improve its resilience, the less vulnerable it will be, to the benefit of the city and the country.” Read more >

Read Executive summary

WWF’s Perspective on Climate Change

By WWF (quote from page 10)

“Climate change is threatening up to 1/3 of animal species with extinction. While the impacts of global warming are only just starting, the decisions that are influencing those impacts are being made now.

Climate change threatens to undo everything that conservation organizations like WWF have achieved over the last half-century. Polar bears may make the headlines, but in reality very few species will be unaffected by a changing climate.

Many species could become extinct. Even entire ecosystems – such as coral reefs, mountain habitats, and large blocks of tropical rainforests such as the Amazon – could completely disappear. Some plants and animals that have adapted to their environment over millions of years are vulnerable to even slight changes in temperature and rainfall. Warming and acidifying seas threaten coral reefs and krill – the basis of the marine food chain in many parts of the world. Large mammals like whales may be forced to travel further in search of food, often leaving the safety of the protected areas that WWF and others have fought so hard to secure.

Exploration for oil, coal and gas – and the transportation and infrastructure associated with it – is also a threat to many species. These activities include coal port expansion on the Great Barrier Reef, oil exploration on the edge of the Congo’s mountain gorilla habitat, and crude oil marine export off the lush west coast of Canada. In each of these places, we risk wildlife being a part of the price we pay for our current investment decisions. It doesn’t have to be this way.

Human beings will not be immune to the consequences of a changing climate. WWF’s mission is to protect the magnificent array of living things that inhabit our planet and to create a healthy and prosperous future in which humans live in harmony with nature. Solving the energy crisis is fundamental to this, whatever tough choices and challenges it brings. Read more >

 

 

Innovation Risk: How to Make Smarter Decisions

By Robert Carhart Merton for Harvard Business Review

New products and services are created to enable people to do tasks better than they previously could, or to do things that they couldn’t before. But innovations also carry risks. Just how risky an innovation proves to be depends in great measure on the choices people make in using it.

Ask yourself this: If you had to drive from Boston to New York in a snowstorm, would you feel safer in a car with four-wheel drive or two-wheel drive? Chances are, you’d choose four-wheel drive. But if you were to look at accident statistics, you’d find that the advent of four-wheel drive hasn’t done much to lower the rate of passenger accidents per passenger mile on snowy days. That might lead you to conclude that the innovation hasn’t made driving in the snow any safer.

Of course, what has happened is not that the innovation has failed to make us safer but that people have changed their driving habits because they feel safer. More people are venturing out in the snow than used to be the case, and they are probably driving less carefully as well. If you and everyone else were to drive to New York at the same speed and in the same numbers as you did before, four-wheel drive would indeed make you a lot safer. But if you and everyone else were to drive a lot faster, you’d face the same amount of risk you’ve always had in a snowstorm. In essence, you’re making a choice (consciously or unconsciously) between lowering your risk and improving your performance.

If the riskiness of an innovation depends on the choices people make, it follows that the more informed and conscious their choices are, the lower the risk will be. Read more >

Picture: Harvard Business Review ©

The oil well and the damage done

BP counts the political and financial cost of Deepwater Horizon

A disaster as the oil leak in the Gulf of Mexico is not anymore the domain of a private company, an accident, but has been centered into the heart of the public domain, public governance and of public risk management. This story in The Economist share the common thoughts of what happened, what we feel today and shares some thoughts on what will come. It seems that we will enter a new era of public risk management.

The Economist:
““WHO cares, it’s done, end of story, will probably be fine.” Thus, in an e-mail, a manager at BP wrote of the decision to use only a few “centralisers” when cementing into place the pipe that ran from an oil reservoir 13,000 feet (4,000 metres) below the sea floor to Deepwater Horizon, the drilling rig floating 5,000 feet above it. The cement failed—considerably more likely with fewer centralisers, experts say—four days after the e-mail was sent, on April 20th. Oil and gas rushed up the well, dooming the rig and 11 of her crew. Two months on, after perhaps 3m barrels of oil have leaked into the Gulf of Mexico, the story has still not ended and a lot of people, from those who dwell on the gulf coast to the chief executive of BP and the president of the United States, care very much indeed.” Read more >

Cyprus Runs Risk on Desertification

Twenty years ago The Club of Rome brought forward the prognose that with the present techniques (1990) there would be enough drinkable clean water on Earth for 3 billion people. Now we are with much more people on our planet. Of course techniques are better, but with the combination with climate change makes it all more and more a puzzle. Cyprus is struggling.

Cyprus runs the risk of desertification by the end of this century as it feels the brunt of climate change and drought, an expert warned. Studies project a rise in summer temperatures on the east Mediterranean island of between two and four degrees this century, compared to the 1960 to 1990 reference periods, Professor Manfred Lange, a geophysicist, said in an interview. “I think that there is a very definite potential for dramatically increasing desertification,” said Lange, director of the Energy, Environment and Water Research Centre at the non-profit Cyprus Institute.

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European Risk Observatory

Considering the fact that many surveys and studies bring forward the vulnerability of the human factor in all kind of processes, and that risks seems to emerges as human mistakes, it is good to know the background and environment of human behaviour at work.

We think that the Risk Observatory of the
European Agency for Safety and Health at Work is systematically focussing on those risks. More and more people face psychosocial risks at work.

By the end of the fifties, early sixties two comletely different ‘sciences’ met. Architecture and psychology discovered each others worlds and fundaments, to find news answers on social cohesion, human perception and city architecture. The new science was social psychology. We think, like Le Corbusier already build in into his appraoch, that the human factor should be in the middle of our architecture and processes. So also in risk management and governance. Psychology meets management.

This Risk Observatory, with the clear tagline ‘Anticipating change’, we recommend to our members.

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