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Construction clients, business propositions and corporate construction risk
Published in Jason Challender, Russell Whitaker, The Client Role in Successful Construction Projects, 2019
Jason Challender, Russell Whitaker
Business clients are not unused to risk. Risk is prioritised in relation to objectives and is considered as a threat or an opportunity. In summary: Risk as a threat is defined as level of exposure which is considered tolerable.Risk as an opportunity is a measure of how much is put at threat to obtain the benefits of an opportunity.Risk appetite is the amount of risk that an organisation is prepared to be exposed to at any one time.Risk tolerance reflects what boundaries the company is prepared to allow on a day to day basis.
Assigning Responsibility
Published in Garry Honey, A Short Guide to Reputation Risk, 2017
Appetite for risk is determined by perspective in the role of the individual and in the industry sector, but there is another factor determining risk appetite and that is time. Our appetite for risk shifts according to circumstance and other pressures. A law abiding citizen in secure employment but needing a substantial sum for a life saving operation might find the risk of crime worth taking, especially if the reward, that is, financial gain, outweighed the risk of detection. Irrespective of the moral issues, the risk appetite for this individual is not a fixed value and indicates the susceptibility of risk appetite to circumstance.
Enterprise Risk Management
Published in Charles Yoe, Principles of Risk Analysis, 2019
Risk appetite identifies the level of risk the organization will pursue to meet its objectives. Inevitably, organizations may wander outside their appetites, but how far? Risk tolerance statements identify the specific minimum and maximum levels beyond which the organization is unwilling to go. These define the upper and lower levels of risk the organization can absorb without significantly impacting the achievement of its strategic objectives. Exceeding these limits triggers a risk response. Deviations within the expressed boundaries would be bearable, exceeding them would not be.
Proactive disruption impact assessment in manufacturing supply networks
Published in Supply Chain Forum: An International Journal, 2021
Marc Wiedenmann, Andreas Größler
To minimise the impact that a company may face due to a supply disruption, organisations should invest proactively to understand how they can prepare in advance. This enables companies to make better informed decisions based on their risk appetite. The practical contribution of this study is threefold. First, within this paper, an ex-ante approach to quantitatively assessing the potential impact of supply disruptions, combining objective data and subjective managerial knowledge, is suggested (Aven 2012; Tran, Dobrovnik, and Kummer 2018; Tsai, Liao, and Han 2008; Xu et al. 2020). Thus, managerial decision-making based on the company-specific risk appetite is improved by considering disruption risks in both quantitative and qualitative terms. Second, in order to proactively determine the potential financial impact of hypothetical supply disruptions, four supply disruption indicators (SDI) are proposed which are based on a Monte Carlo simulation (MCS) approach adopting both Conditional Value-at-Risk (CVaR) and Value-at-Risk (VaR). This allows not only the examination of the average expected financial impact of supply disruptions on the focal company, but also facilitates the consideration of best- and worst-case scenarios. Thereby, clear and adequate quantitative measures to control supply risk in manufacturing supply networks are developed, focusing exclusively on the risk of supply disruption (Heckmann, Comes, and Nickel 2015; Tran, Dobrovnik, and Kummer 2018). Third, based on the individual disruption risk profiles of the examined supply relations resulting from the established SDIs, treatment strategies are proposed to facilitate the subsequent management of disruption risk.
Understanding, managing and communicating geomechanical mining risk
Published in Mining Technology, 2020
Unacceptable risk is often articulated by mining companies that introduce a zero-tolerance approach to all safety issues. ‘Tolerable’ implies that a certain risk is worth taking and that is being controlled. The concept of risk appetite is useful in aiding decision-makers throughout an organisation, making the necessary trade‐offs between company aims, and defining risk tolerance (Quail 2012). A company’s risk appetite should be defined by its highest level of leadership and management. For example, it is not up to the ground control or rock mechanics engineer to establish a mine’s risk appetite on geomechanical issues such as managing seismicity and meeting production requirements in a deep and high‐stress mine.