Systematic risk

Risk assessment has usually been divided into four different and well-defined phases to ensure that all important issues will be given a fair consideration. The phases of systematic risk assessment include ... 

The primary objective of mitigation systems is cost-effective reduction of risk. A recommended systematic risk-based approach for the selection... 

The process of risk assessment was first formalized (NRC, 1983) by the United States National Academy of Sciences through its National Research Council in 1983. The three stages of risk analysis are defined as risk assessment, risk management and risk communication (Figure 10). The important principle is the functional and organizational separation of exposure and risk assessment from risk management to avoid any non-science-driven influences on the assessment procedures. However, many interactive elements are essential for a systematic risk assessment and management process. 

The HERA project [94] resulted in complete and systematic risk assessments reviewing extensive data sets for all major surfactants where - beyond others - the NOEL and the total exposure is determined. 

The performance of systematic risk assessments is a task often taken by federal agencies like US EPA, US FDA, EU EFSA or national institutions. The result of a risk assessment is a starting point for the risk manager, e.g., the ministries, to develop adequate measures, like controls, limits or use restrictions. In the structured approach to the risk analysis the precautionary principle can be particularly relevant to the risk management. It shall be applied in those circumstances where scientific evidence is insufficient or imcertain and when there are indications for concern [95]. In order to prevent a disproportionately intensive use measures based on the precautionary principle should be... 

The undiversifiable, or systematic, risk is the risk the investor cannot eliminate through diversification of his or her portfolio of investments. Suppose, for example, that prescription drug sales were closely linked to the state of the economy, perhaps because high unemployment produces more people without health insurance. Then, investment in pharmaceutical R D would have a great deal of systematic risk because returns on R D would depend on the state of the economy as a whole, and investors cannot diversify away these economy wide risks. 

Despite the fact that project B s expected cash flow is riskier than that of project A, that risk is largely diversifiable, because it is unique to the project and depends only on the Medicare coverage decision which, we can assume, is unaffected by the state of the economy. Project A s risk, on the other hand, may reflect undiversifiable, or systematic, risk because demand for analgesics may vary with the state of the economy. Although the total risk of project B is much... 

The credit curves (or default swap curves) reflect the term structure of spreads by maturity (or tenor) in the credit default swap markets. The shape of the credit curves are influenced by the demand and supply for credit protection in the credit default swaps market and reflect the credit quality of the reference entities (both specific and systematic risk). The changing levels of credit curves provide traders and arbitragers with the opportunity to measure relative value and establish credit positions. 

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. 

We compare in Exhibit 23.16 the volatilities of a few selected euro and US dollar factors. The common denominator is that euro volatilities are less than their US dollar counterparts. This is true for all factors if we ignore the volatility bursts sometimes observed over a few months for some factors (for instance the Industrial A factor in Exhibit 23.16). The average level of systematic risk observed amongst euro-denomi-nated fixed income instruments is more generally low compared to other markets. Exhibit 23.16 shows one case where euro volatilities seem to be catching up with US levels. A more systematic analysis of how euro volatilities have recently evolved since 2002 would show that this is an exception. On average, euro volatilities have remained low with respect to US ones. Note that this is consistent first with the predictions of the swap factor model, euro spread levels and swap volatility being low compared to other markets. 

In the HERA project, a European voluntary initiative commissioned by A.I.S.E. (representing the formulators and manufacturers of household and industrial and institutional cleaning products) and CEFIC " (representing the suppliers and manufacturers of the raw materials), the most important ingredients of laundry detergents are subject to a systematic risk assessment. This covers product safety from an ecological and human health perspective. The underlying reports are available to the public via the HERA website. 

ABSTRACT The article deals with the landfills and risk identification within waste disposal in a selected region of the Czech Republic. As a case study the systematic risk identification, its evaluation and selection of critical risks during waste disposal at the selected landfills was made. Within the risk management process the methodology of safety audit and checldist analysis were apphed. This methodology is based on semi-quantitative evaluation of received data which are the base for the risk comparison at the selected landfills. 

Formal Safety Assessment [FSA] is a designation used in a number of different contexts, (e.g. the nuclear industry) in order to describe a rational and systematic risk-based approach for safety assessment (Kristiansen 2005). In the maritime world, FSA was first proposed by the UK Marine Safety Agency in 1993 [Marine Coastal Agency from 1998], which was adopted by the International Maritime Organization [IMO] in 1997. The guidelines for FSA were approved for use by IMO through the Guidelines for Formal Safety Assessment (IMO 2002). 

Probabilistic risk assessment, data sources, systematic risk identification methodologies (e.g. HAZOPS) assessment methodologies (fault trees and event trees) estimation of consequences. 

Process safety, operations performance and systematic risk reduction priorities had not been set and consistently reinforced by management. 

Threat assessments are a common approach among school- and district-wide plans to systematically assess risk among troubled students. Reddy et al. (2000) assert that threat assessment is the most promising approach for providing school personnel with a systematic risk assessment of targeted violence in schools. 

Finally, the third principle of safety risk assessment is the necessity of extensive use of Domain Specific Expertise. The systematic risk based approach to any undertaking has been developed within Railtrack PLC (now Network Rail) and has become a nationwide Engineering Safety Management guidance adopted by LUL and the whole of UK railways. The following are the key risk assessment principles (RSSB, 2007) ... 

FMECA results a team of scientists performed a systematical risk analysis of the most important components using the FMECA method. In total, 29 potential failures were identified and their relative priorities for applying measures were determined. Seven of these failure modes are only influencing the operability itself and are not relevant form a safety point of view. From the remaining 22 failure modes, 6 are related to mechanical operations and the remaining 16 are indirectly related to the hazardous properties of the solvents. Since those properties are not directly evaluated by the procedure, the relative importance and magnitude of the effects remain unclear after the FMECA analysis. 

Flaus, J. M. (2008). A model-based approach for systematic risk analysis. Proceedings of the Institution of Mechanical Engineers, Part O Journal of Risk and Reliability, 222(l) 79-83. 

The theory and application of systematic risk assessment is a part of effective risk control processes. Methods for risk assessment or estimation allow the quantification of the risks and, thus, provide top managers with relevant information for risk reduction within the Man-Machine-Environment system. The following theses form the basis for the risk assessment methods selection (see also Chapter 1) ... 

Several folks I have talked to in the environmental community are willing to talk seriously about geological sequestration. But it is still in its early days. There are still no attempts at systematic risk assessment, and there is little sense of how, where, under what regulatory framework, and with what incentive sequestration would actually occur. All of these factors will likely influence people s reaction to geological sequestration. 

The conclusions are rather serious. Ymer s management has not adequately foreseen the SHE challenges involved in carrying out modifications in parallel with ongoing production. There is a need to upgrade the permit-to-work system so that it can handle a much higher activity level. Systematic risk assessments must be performed on all modification work and procedures need to be established on the basis of the results. 

Majority of incidents could have been anticipated if a systematic risk-based approach had been used throughout the life of the system... 

The analysis of the incidents shows that the majority were not caused by some subtle failure mode of the control system, but by defects which could have been anticipated if a systematic risk-based approach had been used throughout the life of the system. It is also clear that despite differences in the underlying technology of control systems, the scfety principles needed to prevent failure remain the same. ... 

Systematic risk analysis methods are essential to understanding the economic vnlnerability of biomass-based snpply chains and industrial networks. In particular, IIM methodology is useful for understanding how losses can cascade through such systems as a result of interdependencies across economic sectors. The application of IIM on different forms of natural and man-made disasters has proven its versatihty as a tool for economic analysis. This chapter focuses on two Southeast Asian conntries, namely, Malaysia and the Philippines,... 

According to this, the probability of occurrence can increase. But a systematic risk management system can reduce this effect again. 

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