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Risk management tools are at the core of farm policy in many developed countries, and their effectiveness relies on the appropriate mechanism design. This study developed a gain-loss framework based on prospect theory to examine the reasons for the declining use of the main risk management tool offered to farmers despite growing volatility in returns. Using the administrative Ontario Farm Income Database (OFID) 2003 to 2013 and taking the beef sector as the example, this study found that the gain-loss framework predicts and explains the dynamic program participation pattern better than the conventional expected utility framework. Farms were found to be more likely to stay enrolled in the program when they experienced either larger gains or losses in revenue compared to previous years, suggesting that they were using the insurance programs both as an investment strategy (to seek government subsidies) and as a risk management tool (to protect against business risks), though the effects of revenue losses and hence risk management needs were stronger than gains. In addition, the program payment history and farm characteristics also shape the dynamic participation patterns. The findings increased the understanding of the drivers of withdrawal behavior associated with government-sponsored business risk management programs.
Food and Drug Administration’s (FDA) Draft Guidance for Industry on pharmaceutical REMS (Risk Evaluation and Mitigation Strategies) assessment and survey methodology highlights physician knowledge–attitudes–behaviors (KAB) surveys as regulatory science tools. This mixed-methods evaluation advances regulatory science and the assessment of FDA REMS programs when using physician surveys. We: (1) reviewed published physician survey response rates; and (2) assessed response bias in a simulation study of secondary survey data using different accrual cut-off strategies.
A systematic literature review was conducted of US physician surveys (2000–2014) on pharmaceutical use (n = 75). Kruskal–Wallis tests were used to examine the relationships between response rates and survey design characteristics. The simulation was conducted using secondary data from a population-based physician KAB survey on diabetes risk management with antipsychotic use in Missouri Medicaid (n = 973 accrued over 30 weeks). Survey item responses were compared using Pearson’s chi-square tests for two faster completion simulations: Fixed Sample (n = 300) and Fixed Time (8 weeks).
Survey response rates ranged from 7% to 100% (median = 48%, IQR = 34%–68%). Surveys of targeted populations and surveys using member lists were associated with higher response rates (p = 0.02). In the simulation, 9 of 20 (45%) KAB items, including diabetes screening advocacy, differed significantly using the smaller Fixed Sample strategy (achieved in 12 days) versus full accrual. Fewer response differences were found using the Fixed Time strategy (2 of 20 [10%] items).
Published data on physician surveys report low response rates with most associated with the sample source selected. FDA REMS assessments should include formal evaluation of survey accrual and response bias.
This paper describes the use of a stochastic model of the full regulatory balance sheet of an insurer under the Solvency II regime. The purpose of the model is to enable firms to understand the key risks that threaten the regulatory solvency of the firm and therefore its long-term business objectives.
The definition of initial requirements in the early phase of product development is characterised as a decision process under highest uncertainties. Studies show that projects often deviate from their planned goals or even fail due to ill-defined requirements. Despite the importance and criticality of this task, a detailed description and risk-oriented explanation is missing in the product development literature. The goal of this paper is to develop an explanation model/frame which establishes a link between the development context and an appropriate procedure for the initial requirements definition based on general risk treatment strategies. In a first step, risk-driving context factors with high influence on this task are identified. Then two case studies are compared to analyse the interrelations between their context factors and the applied risk treatment strategies that are implemented in their procedures for defining initial requirements.
Risk management (RM) in new product development (NPD) is often implemented as a standardized framework and ends up being carried out as a tick the box, non-value adding activity. To avoid this problem, RM needs to be tailored to the organization and NPD project. This paper identifies a gap in both understanding and facilitating tailoring, i.e. design of RM systems in NPD. To understand how to design RM systems, we must better understand how RM adds value to NPD activities. We applied Product Development Value Stream Mapping (PDVSM) to RM and conceptualized a Risk Value Stream Mapping (RVSM) framework to support design. Through a state-of-the-art literature review, we identified typical categories of value and waste in RM as well as approaches to model the RM in NPD. We developed and tested components of the RVSM framework based on PDVSM in three case companies. In this paper, results are presented regarding waste, value and potential ways to model the value stream in RM. The framework enables a diagnosis of the current state of RM in companies and supports future design activities pertaining to RM systems. This paper is positioned at the intersection of design, lean thinking and RM
Demands on developers are increasing due to the growing complexity of products in engineering. As many different disciplines are involved in planning the communication and data exchange becomes difficult. Systems engineering and especially the model-based development have proven themselves for this sector. However, the different languages for system modeling, such as SysML, offer considerable potential for optimization. A corresponding data model must be modelled so that data is available continuously and across all levels. Based on this data model, various engineering processes like risk management can be integrated into this model. New stereotypes are defined within SysML so that errors and risks can be implemented in the system model. This makes it possible to determine influences and effects that risks and errors have on other components of a product across all structures.
Structuring the early design phase of automotive systems is an important part of efficient and successful development processes. Today, safety considerations (e.g., the safety life cycle of ISO 26262) significantly affect the course of development. Preliminary designs are expressed in functional system architectures, which are required to form safety concepts. Thus, mapping tasks and work products to a reference process during early design stages is an important part of structuring the system development. This contribution describes the systematic creation and notation of the functional safety concept within the concept phase of development of an unmanned protective vehicle within the research project aFAS. Different stages of preliminary design and dependencies between them are displayed by the work products created and used. The full set of functional safety requirements and an excerpt of the safety argument structure of the SAE level 4 application are presented.
The aim of this systematic review is to investigate the community-based academic partnership roles in disaster risk management.
The assessment of the documents was conducted by reviewing abstracts and full papers of the available studies, which provided considerable background and promoted knowledge in academic interventional roles in disaster risk management. The articles were searched with a wide range of key words related to the research topic. The studies included the research available between 2000 and September 2017 in the English language. The selection of articles was conducted based on the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) checklist.
Of 997 articles, we selected 12 full-text articles that met the criteria for the final review based on the study objective. The results show that, although universities can play multidirectional roles in disaster risk management phases, the development of the academic partnership potential and collaboration for disaster risk management and disaster risk reduction for stakeholders is necessary.
The universities’ potential in providing sufficient disaster health literacy is not currently considered important enough in communities.Therefore, the proper context-bound models of development based on a community’s skills and universities’ potential should receive more attention.
In 1989, Edgar Woolard began his tenure as chief executive of the chemical giant DuPont by calling for a new “corporate environmentalism.” DuPont has changed dramatically since then to become more environmentally sustainable, but the company still has a poor record in some areas. The sustainability push also had mixed financial consequences. Though eco-efficiencies saved DuPont billions of dollars, the effort to create more sustainable engines of corporate growth failed to meet Wall Street expectations. The DuPont story offers important insights into the difficulties of greening an established industrial enterprise.
Healthcare organizations have invested efforts on hospital-based health technology assessment (HB-HTA) and enterprise risk management (ERM) processes for novel systems to obtain more accurate data on which to base strategic decisions. This study proposes to analyze how HB-HTA and ERM processes can share personal resources and skills to achieve principles with value-oriented results.
Literature on ERM and HB-HTA and data from interviews with healthcare managers compose the research data sources, which were submitted to a qualitative data analysis. It was oriented to identify the association between ERM and HB-HTA application in hospitals and the common principles between both processes, in addition to proposing the capability to share personal resources between both teams in a matrix.
The common principles and personal background suggested for HB-HTA and ERM teams allowed the build of a matrix identifying how both teams can work in an integrated manner being more effective and value-oriented. The shared resource matrix reports how each professional (with a specific background) may interact with each activity associated to HB-HTA or ERM implementation guidelines.
The identification of common principles and capabilities between ERM and HB-HTA suggested advances with the literature from both research areas. The opportunity to share personal resources also contributes to the implementation of those processes in hospitals with less financial resources, approaching its own management to be more efficient with the care chain.
Although international and Italian conventions have issued numerous communication protocols to assist people with disabilities during earthquakes or other maxi-emergencies, no tailored strategies exist to create and disseminate information online to deaf people. On August 24, 2016, a devastating earthquake destroyed Amatrice in Central Italy. This natural disaster underlined the lack of information on disabled people possibly involved and the lack of tailored, online communication tools. Having various registries listing disabled residents in the earthquake area might have benefitted emergency procedures. To access information easily and expedite risk management, the authors developed an online information tool for deaf persons, their families, and caregivers. Within hours after the earthquake, they published a Facebook page (Facebook, Inc.; Menlo Park, California USA) including a video provided with subtitles, Italian sign language, and service numbers. Those who accessed the Facebook page spread the information to other social media. Although no registry yet specifies figures, the annual incidence of approximately three to five/1,000 new deaf persons diagnosed in Italy implies that around 5.4% of the total 43,507 Italian deaf people live in the earthquake territory, and presumably 1.3% are younger than 18 years of age. The Facebook page obtained unexpectedly numerous accesses and satisfaction from deaf adults and families with deaf children, as well as hearing family relatives and caregivers. A total of 60% deaf and 10% hearing people asked for more information. Despite limitations, the effort to develop a page for deaf people and their families, via a world-wide social media, permits fast access, outlines safety precautions during maxi-emergencies, and disseminates essential information designed for deaf people on civil protection services. The Facebook page provides a replicable example for developing similar, user-friendly, online tools for disabled groups to disseminate important safety information after earthquakes or other maxi-emergencies.
Rotondi L, Zuddas M, Marsella P, Rosati P. A Facebook page created soon after the Amatrice Earthquake for deaf adults and children, families, and caregivers provides an easy communication tool and social satisfaction in maxi-emergencies. Prehosp Disaster Med. 2019;34(2):137–141
Common bean (Phaseolus vulgaris L.) is perhaps the most important grain legume in sub-Saharan Africa (SSA) smallholder systems for food security and household income. Although a wide choice of varieties is available, smallholder farmers in western Kenya realize yields that are low and variable since they operate in risky production environments. Significant seasonal variations exist in rainfall and severity of pests and diseases. This situation is worsened by the low and declining soil fertility, coupled with low capacity of farmers to purchase production inputs such as fertilizers, fungicides and insecticides, and land scarcity. The objective of this study was to investigate whether growing multiple-bean varieties instead of a single variety can enable farmers enhance yield stability over seasons and ensure food security. Five common bean varieties were evaluated in multiple farms for 11 seasons at Kapkerer in Nandi County, western Kenya. Data were collected on grain yield, days to 50% flowering and major diseases. In addition, daily rainfall was recorded throughout the growing seasons. The five varieties were combined in all possible ways to create 31 single- and multiple-bean production strategies. The strategies were evaluated for grain yield performance and yield stability over seasons to determine the risk of not attaining a particular yield target. Results indicated that cropping multiple-bean varieties can be an effective way for reducing production risks in heterogeneous smallholder systems. Yield stability can be greatly enhanced across diverse environments, leading to improved food security, especially for the resource-poor smallholder farmers operating in risk-prone environments. Although the results show that some of the single-bean variety strategies were high yielding, their yield stability was generally lower than those of multiple strategies. Resource-poor risk averse farmers can greatly increase the probability of exceeding their yield targets by cropping multiple-bean varieties with relatively low yields but high grain yield stability. Trading-off high grain yield for yield stability might be an important strategy for minimizing bean production risks.
The Working Party has produced this report in order to prompt readers to engage at an early stage in InsurTech projects, through considering (i) the full range of risks associated with InsurTech developments, (ii) the lifecycle of an InsurTech venture and how any risk considerations may vary over this lifecycle and (iii) the extent to which InsurTech ventures align with risk strategy and risk appetite.
The report contains practical guidance for actuaries, risk professionals, insurance companies and their Boards on these considerations, and can be used to facilitate appropriate questioning, to help ensure that InsurTech-related business decisions are fully cognisant of the risk management issues and to help ensure the success of projects.
The Working Party developed this guidance having carried out an industry survey on a number of risk management topics relating to InsurTech, as well as having carried out interviews with a number of relevant senior stakeholders across the insurance industry, in order to better understand current sentiment and how risk management plays a part when considering opportunities in InsurTech. The Working Party views on the findings from these activities are summarised in the report.
Integrated crop-livestock systems (ICLS) are currently promoted agricultural production systems that aim to use better resources through production integration and intensification. While this system reduces some risks, it adds complexity and new risks to businesses due to interdependence between the agricultural modules. To deal with these issues, integrated risk management is required to reduce the effects of risks and to take advantage of the opportunities of an ICLS. Generically, enterprise risk management (ERM) meets this need by proposing comprehensive and coherent risk management, instead of managing agricultural module risks individually. However, there is a need to customize the ERM approach to ICLS. Therefore, the current study aims to develop a method to manage risks for ICLS based on ERM, integrating the management of risks and aligning risk management with the strategic objectives. A literature review, a pilot study, interviews with experts, four case studies and 20 practitioners supported the method development and evaluation through three versions. As a result, the method identifies and relates risks through process mapping with a qualitative and quantitative analysis of their impacts, determines risk responses based on willingness to take risks, and helps identify processes to control, communicate and monitor the risks. The method also stimulates the implementation of ICLS in market-oriented farms, providing an approach to increase the chances of ICLS success. The main difference from previous research lies in the integrative management of multiple risks, the alignment of risks with strategy and the consideration that a risk might be considered an opportunity.
A method to hedge variable annuities in the presence of basis risk is developed. A regime-switching model is considered for the dynamics of market assets. The approach is based on a local optimization of risk and is therefore very tractable and flexible. The local optimization criterion is itself optimized to minimize capital requirements associated with the variable annuity policy, the latter being quantified by the Conditional Value-at-Risk (CVaR) risk metric. In comparison to benchmarks, our method is successful in simultaneously reducing capital requirements and increasing profitability. Indeed the proposed local hedging scheme benefits from a higher exposure to equity risk and from time diversification of risk to earn excess return and facilitate the accumulation of capital. A robust version of the hedging strategies addressing model risk and parameter uncertainty is also provided.
Objectives: The aim of this study was to explore the risk assessment tools and criteria used to assess the risk of medical devices in hospitals, and to explore the link between the risk of a medical device and how those risks impact or alter the training of staff.
Methods: Within a broader questionnaire on implementation of a national guideline, we collected quantitative data regarding the types of risk assessment tools used in hospitals and the training of healthcare staff.
Results: The response rate for the questionnaire was 81 percent; a total of sixty-five of eighty Dutch hospitals. All hospitals use a risk assessment tool and the biggest cluster (40 percent) use a tool developed internally. The criteria used to assess risk most often are: the function of the device (92 percent), the severity of adverse events (88 percent) and the frequency of use (77 percent). Forty-seven of fifty-six hospitals (84 percent) base their training on the risk associated with a medical device. For medium- and high-risk devices, the main method is practical training. As risk increases, the amount and type of training and examination increases.
Conclusions: Dutch hospitals use a wide range of tools to assess the risk of medical devices. These tools are often based on the same criteria: the function of the device, the potential severity of adverse events, and the frequency of use. Furthermore, these tools are used to determine the amount and type of training required for staff. If the risk of a device is higher, then the training and examination is more extensive.
In this paper, we review changes in the insurance industry due to new risk-based regulations such as Solvency 2 and Swiss Solvency Test. The move from corporate management based on cash-flow to risk-based management is described and discussed through its consequences on capital management, economic valuation and the internal model. We discuss the limits and difficulties of enterprise risk management and its effect on the organisation of companies and the role of actuaries in insurance. The risk/return relation is becoming a central element of the company’s management slowly supplanting the traditional accounting view.
Insurance regulation often dictates that insurers monitor their solvency risk in real time and take appropriate actions whenever the risk exceeds their tolerance level. Bayesian methods are appealing for prediction problems thanks to their ability to naturally incorporate both sample variability and parameter uncertainty into a predictive distribution. However, handling data arriving in real time requires a flexible non-parametric model, and the Monte Carlo methods necessary to evaluate the predictive distribution in such cases are not recursive and can be too expensive to rerun each time new data arrives. In this paper, we apply a recently developed alternative perspective on Bayesian prediction based on copulas. This approach facilitates recursive Bayesian prediction without computing a posterior, allowing insurers to perform real-time updating of risk measures to assess solvency risk, and providing them with a tool for carrying out dynamic risk management strategies in today’s “big data” era.
Conventional diagnoses of the 2007/8 Global Financial Crisis see it as “abnormal”, and then resort to explanations in terms of “irrational exuberance”, “animal spirits”, “herding behaviour” and so on. The prescription – “better regulation” – then follows automatically, as it has done after every such crisis, all the way back to tulipmania 400 years ago. But if there are different “seasons of risk”, and if financial sector actors are able to latch onto different risk-handling strategies, each appropriate to one of those seasons and inappropriate to the others, then we have a very different explanation: one in which, in contrast to both neoclassical and behavioural economics, rationality is no longer singular. This “anthropological” hypothesis has its roots in Mary Douglas’s book “How Institutions Think”, and the paper shows how it is well supported by historical evidence, agent-based modelling, and fieldwork among both financial sector firms and their regulators, as well as by parallels from ecology, organisation theory and evolutionary (i.e. Schumpeterian) economics.
Fruit producers in the Eastern United States face a wide range of weather-related risks that have the capacity to largely impact yields and profitability. This research examines the economic implications associated with responding to these risks for sweet cherry production in three different systems: high tunnels, revenue insurance, and weather insurance. The analysis considers a distribution of revenue flows and costs using detailed price, yield, and weather data between 1984 and 2013. Our results show that the high tunnel system generates the largest net return if significant price premiums exist for earlier and larger fruit.