Corporate risk management

442 Pages·2008·4.112 MB·English

by  Tony Merna, Faisal F Al-Thani

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Corporate Risk Management
2nd Edition
Tony Merna and Faisal Al-Thani

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Corporate Risk Management
2nd Edition

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Corporate Risk Management
2nd Edition
Tony Merna and Faisal Al-Thani

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LibraryofCongressCataloging-in-PublicationData
Merna,Tony.
Corporateriskmanagement/TonyMernaandFaisalAl-Thani.–2nded.
p.cm.
Includesbibliographicalreferencesandindex.
ISBN978-0-470-51833-5(cloth:alk.paper)
1.Riskmanagement.2.Corporations—Finance—Management.
3.Industrialmanagement.
I.Al-Thani,FaisalF. II.Title.
HD61.M4632008
658.15’5—dc22
2008004969
Typesetin11/13ptTimesbyAptaraInc.,NewDelhi,India
PrintedandboundinGreatBritainbyTJInternationalLtd,Padstow,Cornwall,UK
Thisbookisprintedonacid-freepaperresponsiblymanufacturedfromsustainableforestry
inwhichatleasttwotreesareplantedforeachoneusedforpaperproduction.
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Tony Merna – to my loving mother; an inspiration
Faisal Al-Thani – to my family

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Contents
1 Introduction 1
1.1 Introduction 1
1.2 WhyManagingRiskisImportant 1
1.3 GeneralDefinitionofRiskManagement 2
1.4 BackgroundandStructure 3
1.5 Aim 4
1.6 ScopeoftheBook 4
2 The Concept of Risk and Uncertainty and the Sources
andTypesofRisk 7
2.1 Introduction 7
2.2 Background 7
2.3 Risk and Uncertainty: Basic Concepts and General
Principles 8
2.4 TheOriginof Risk 9
2.4.1 DimensionsofRisk 11
2.5 Uncertainties 12
2.6 SourcesofRisk 15
2.7 TypicalRisks 18
2.7.1 ProjectRisks 18
2.7.2 GlobalRisks 20
2.7.3 ElementalRisks 20
2.7.4 HolisticRisk 20
2.7.5 StaticRisk 21
2.7.6 DynamicRisk 21
2.7.7 InherentRisk 21
2.7.8 ContingentRisk 22
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viii Contents
2.7.9 CustomerRisk 23
2.7.10 Fiscal/RegulatoryRisk 23
2.7.11 PurchasingRisk 23
2.7.12 Reputation/DamageRisk 24
2.7.13 OrganisationalRisk 24
2.7.14 InterpretationRisk 24
2.7.15 ITRisk 24
2.7.16 TheOPECRisk 25
2.7.17 ProcessRisk 26
2.7.18 Heuristics 27
2.7.19 DecommissioningRisk 28
2.7.20 InstitutionalRisks 28
2.7.21 SubjectiveRiskandAcceptableRisk 28
2.7.22 PureRisksandSpeculativeRisks 29
2.7.23 FundamentalRisksandParticularRisks 29
2.7.24 IatrogenicRisks 29
2.7.25 DestructiveTechnologyRisk 29
2.7.26 PerceivedandVirtualRisks 30
2.7.27 ForceMajeure 30
2.8 PerceptionsofRisk 33
2.9 StakeholdersinanInvestment 34
2.9.1 StakeholderIdentification 35
2.9.2 StakeholderPerspectives 36
2.9.3 StakeholderPerceptions 36
2.10 Summary 37
3 TheEvolutionofRiskManagementandtheRisk
Managemen tProcess 39
3.1 Introduction 39
3.2 TheEvolutionofRiskManagement 39
3.2.1 TheBirthofRiskManagement 39
3.2.2 RiskManagementinthe1970s–Early
Beginnings 40
3.2.3 Risk Management in the 1980s – Quantitative
AnalysisPredominates 40
3.2.4 RiskManagementinthe1990s–Emphasison
MethodologyandProcesses 42
3.3 RiskManagement 44
3.4 TheRiskManagementProcess–Identification,
AnalysisandResponse 44