Spreading risk

RISKS CHEMICAL/BIOLOGICAL CONTAMINATION. If this step is not done, small amounts of contamination may still be on the mask and hood. You will risk spreading contamination to your skin during the undressing. 

The court acknowledged the adverse effects its ruling would have on the ability of small firms to obtain fair price transfers of their enterprises. It decided, however, that risk spreading and cost avoidance over time would become the norm for corporate planning. 

This means that p f) is the expected value of the present value of the bond s cash flows, that is, the expected yield gained by buying the bond at the price p f) and holding it to maturity is r. If our required yield is r, for example this is the yield on the equivalent-maturity government bond, then we are able to determine the coupon rate C for which p r) is equal to 100. The default-risk spread that is required for a corporate bond means that C will be greater than r. Therefore, the theoretical default spread is C — r basis points. If there is a zero probability of default, then the default spread is 0 and C = r. 

Although spreads may be viewed as a function of default risk and recovery risk, spread models do not attempt to break down the spread into its default risk and recovery risk components. 

Each corporate bond will only be exposed to one of these factors, with an exposure that will typically increase with the bond s maturity. A rule of thumb is that it will be comparable to the bond s exposure to the shift factor. The spread risk of almost all AAA, AA, and A rated bonds will be less than their interest rate risk, and it is only for BBB rated bonds and in some very specific market sectors such as Energy and Telecoms that spread risk starts exceeding benchmark risk. Spread risk is by far the dominant source of systematic risk for high-yield instruments. 

During the financial crash of2007—2008, in reaction to bond market volatility around the world brought about by the bank liquidity crisis and subsequent global recession, the USD swap spread widened, as did the spread between 2- and 10-year swaps, reflecting market worries about credit and counterparty risk. Spreads narrowed in the first quarter of 2009, as credit concerns sparked by the 2007—2008 market corrections declined. The evolution of the 2- and 10-year USD swap spreads is shown in FIGURES 7.4 and 7.5. 

TABLE 10.2 Hypothetical Cnrpnratfi Rnnd Yifilds and Risk Spread... 

MATURITY t RISK-FREE YIELD r CORPORATE BOND YIELD r+y RISK SPREAD y CUMULATIVE PROBABILITY OE DEEAULT ANNUAL PROBABILITY OE DEEAULT... 

Dose—response relationships are useful for many purposes in particular, the following if a positive dose—response relationship exists, then this is good evidence that exposure to the material under test is causally related to the response the quantitative information obtained gives an indication of the spread of sensitivity of the population at risk, and hence influences ha2ard evaluation the data may allow assessments of no effects and minimum effects doses, and hence may be valuable in assessing ha2ard and by appropriate considerations of the dose—response data, it is possible to make quantitative comparisons and contrasts between materials or between species. 

Numerical Measures of Risk Without risk and the reward for successfully accepting risk, there would be no business activity. In estimating the probabilities of attaining various levels of net present value (NPV) and discounted-cash-flow rate of return (DCFRR), there was a spread in the possible values of (NPV) and (DCFRR). A number of methods have been suggested for assessing risks and rewards to be expected from projects. 

Capital is at risk until the breakeven point has been reached. It is common practice to give consideration to the discounted breakeven point (DEEP), the time at which the (NPV) is zero when discounting at the cost of capital. At any time after the (DEEP), the project will have recovered its cost and provided a greater return on the capital than the cost of capital. It is customary for management to spread risk by diversifying the activities of a company among a portfoho of projects. 

A material that has a high toxicity does not necessarily present a severe toxic hazard. For example, a ton of lead arsenate spilled in a busy street is unhkely to poison members of the public just a short distance from the spiU, because it is not mobile. It could be carefully recovered and removed and would present a low risk to the gener pubhc, even though it is extremely toxic. On the other hand, a ton of liquefied chlorine spilled on the same street could become about 11,000 fF of pure gas. The IDLH for chlorine is 25 ppm. This is a concentration such that immediate action is required. Thus, the one ton of chlorine, if mixed uniformly with air, could create a cloud of considerable concern, having a volume of about 4.4 X 10 fF or a sphere 770 ft in diameter. This could quickly spread over downwind areas and... 

The nature of the conditions of intensive production, however, can increase the risk of diseases and infections which can spread very rapidly and devastate large numbers of animals." Thus it is common practice for producers of poultry to add coccidiostats to their diets and vaccines to their drinking water in order to prevent coccidiosis and other infectious diseases such as bronchitis and Newcastle disease. A similar problem exists for intensively reared fish, where it is necessary to add antibiotics to their diets. A problem with intensively reared fish is that their diet is added directly into the water in which they live thus drugs and other additives in the diet are relatively easily dispersed into the local environment of fish farms, where they can increase bacterial resistance and also cause problems such as algal blooms. 

Seveso, Italy, caused wide-spread pollution of the industrial site as well as its surroundings. Serious effects of dioxin were detected both in dontestic animals, such as cows and sheep, and in humans, the most serious early effects being a serious skin disease, chloracne, and alterations in the function of the immune system. Follow-up studies have demonstrated that this accident also increased the cancer risk in exposed individuals. ... 

For a constant exhaust flow rate, an increase in supply airflow provides better operator protection or production protection, but it also increases contaminant spread and risk of draft. Any decrease in supply airflow rate will result in a reduction of the design conditions of the operator or product protection. 

Usually there is no opportunity to repeat the measurements to determine the experimental variance or standard deviation. This is the most common situation encountered in field measurements. Each measurement is carried out only once due to restricted resources, and because field-measured quantities are often unstable, repetition to determine the spread is not justified. In such cases prior knowledge gained in a laboratory with the same or a similar meter and measurement approach could be used. The second alternative is to rely on the specifications given by the instrument manufacturer, although instrumenr manufacturers do not normally specify the risk level related to the confidence limits they are giving. 

It would be going too far to say that no one should ever enter a cloud of flammable vapor to isolate a leak. There have been occasions when, by taking a risk for a minute, a man has isolated a leak that would otherwise have spread a long way and probably ignited, perhaps exploded. However, we should try to avoid putting people in such situations by providing remotely operated emergency isolation valves to isolate likely sources of leak. 

To estimate tlie potential iiupaet on tlie publie or tlie environment of aeeidents of different types, the likely emergeney zone must be studied. For example, a liazardous gas leak, fire, or explosion may eause a toxie cloud to spread over a great distance. The minimum atmospheric dispersion model. Vtirious models can be used tlie more difficult models produce more realistic results, but tlie simpler and faster models may provide adequate data for planning purposes. A more tliorough discussion of atmospheric dispersion is presented in Part 111 - Healtli Risk Assessment. 

In any industrial facility, from offices to factories and laboratories, spills happen and create a variety of risks to workers. Inside a plant, spills result in chemicals on the floor, in the air, or on the workers themselves. When releases occur outside the plant (e.g., chemical releases from tank cars or trucks, the spread of noxious fumes from an internal spill), the potential for harm extends far beyond the facility, particularly with major catastrophes such as the Bhopal chemical release, the Exxon Valdez oil spill. New York s Love Canal, and dioxin-contaminated Times Beach in Missouri, have led several federal departments and agencies to enact protective regulations. These protections are aimed at protecting a much broader range of people, property, and the environment than most regulations administered by OSHA. 

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