Risk management principles concepts

Risk management concepts have been around and used for many years in high hazard industries. However, many safety programs are still designed around regulatory compHance using post loss criteria and only limited use basic risk management principles. 

Previous sections of this Report have discussed concepts, precedents, and technical information that are important to development of NCRP s recommendations on a comprehensive and risk-based hazardous waste classification system. This Section discusses selected aspects of this background information that are critical to establishing the principles and framework for the recommended hazardous waste classification system. The topics discussed involve technical aspects of risk assessment and issues of risk management. 

Certain aspects of chemical science should be grasped before entering the domains of toxicology, risk assessment, and risk management. We need not dip into fundamental concepts and the lesson will be brief and of very limited scope. Many of the definitions and principles to be discussed are (or should be) well known by those who have passed through a high school chemistry course, even with relatively poor success, but we need to be reminded of them and keep them in mind, as matters of chemicals in the environment come under discussion later in the book. 

Real option valuation (ROV) Recently, Gupta and Maranas (2004) revisited a real-option-based concept to project evaluation and risk management. This framework provides an entirely different approach to NPV-based models. The method relies on the arbitrage-free pricing principle and risk neutral valuation. Reconciliation between this approach and the above-described risk definitions is warranted. 

Section 13.3 outiines the principles of modeling packaging and food, using two simple but effective examples. They illustrate the concepts of critical steps, or materials or substances critical for food safety via a quantitative failure mode, effects and criticahty analysis (FMECA) approach, derived from concepts used by the aviation or electronic industry for critical systems. It is a systematic approach which today facilitates the risk management at the sector scale, of several thousand references or complex assemblies integrating various materials and dozens of substances [NGU13] via an expert distributable and modifiable system FMECAengine [VIT 11b]. 

Review and discussion of basic concepts and principles in integrated risk management... 

The massive growth in social science interest in risk has encompassed a variety of disciplinary approaches to the study of risk and a range of different focuses of interest, from the individual to cultural (see Krimsky and Golding, 1992). But as Renn (1992 61) explains, All risk concepts of the social sciences have in common the principle that the causes and consequences of risks are mediated through social processes . So it is recognized that technical, quantifiable risk calculations do not stand alone in a vacuum but they need to be interpreted. As Bernstein (1996 206 ff.) explains, risk management is a practical art since much of the information we have is incorrect or incomplete. Decisions need to be made about how much uncertainty is acceptable and what levels of risk are tolerable. 

There have been a number of calls for increased focus on foundational issues in risk analysis, addressing concepts, principles and methods when assessing, managing and communicating risk (Aven 2012a). 

Portfolio management concepts have been an accepted component of the financial services realm for decades, and the need to diversify risk continues to be an effective organizing principle for many financial instruments and analytic techniques. Risk assessment is also a key component in the pharmaceutical world, where as few as 1 in 5000 laboratory-tested compounds ever makes it to the market. As such, the pipeline portfolio is a critical indicator of the future of a pharmaceutical firm, and the process of analyzing and managing it effectively is of vital strategic importance. 

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