Question

Your task is to develop quantified Risk models of two Risks of interest to you. This is an academic
exercise and its purpose is to make you familiar with the process of quantified Risk modelling and
to show me you understand the theory and the practice.
a) Write up each Risk as a case study that explains the Risk in detail and describes the proposed
control measures.
b) Estimate/judge the values that could realistically be given to the various parameters relevant to
modelling Risk and explain your reasoning to me. Don’t spend inordinate amounts of time
trying to justify any of the values that have to be estimated/judged in order to complete the task
(eg. does a death cost $3M or is it $3.2M? Is the Exposure 20 times a year or 18?). However,
ensure that you do have justification for the values you use as I am not interested in you simply
using a number with no justification.
c) Use your spreadsheet to estimate the position of the Risk line, using any necessary “reality
checks”. In other words, justify or even make a clear statement of the inadequacies of what
you have done and the need for further investigation. Estimate the Risk value.
d) Propose a possible control measure change/improvement and estimate the associated
implications for productivity, recurrent costs and/or capital requirements. I am well aware
these may based on judgement unless you have a close knowledge of a particular case.
e) Provide me with an explanation of the anticipated effect of this proposed control measure on
each of the parameters that determine Risk and use this to justify a reduction in the Risk value
estimated before this improved control measure is applied.
f) Use this to estimate the effect of the improved control measure on one or both (as appropriate)
of recurrent costs and payback period.

Answer 1

a)administrative controls is one of the risk control which limiting the usage of equipments below thw exposure action values and enforcing a one way traffic system on site and engineering controls which enclosing dangerous hazardous dust from the air.

b) while constructing the building or any infrastructure we have to take considerations of factor of safety through which we can ensure the safety and explosure of the estimating the project and building it for lifetime safety based on the criteria of the clints and avaliablility of the resources.

c)the risk value measurement shows a normal distribution of past losses.the measures is often applied to an iinvestment porrttfollia ffoee which thte caluclation gives a confidence interval about the livehood

mainly risk value is caluculated through the formula-- {(expected wewighted return of portfolia)-(z-score of confidence inerval*standard deeeviation of portfolio)}8 portfooolio value through which spread sheet is prepared.

d)elimination and substitution are extensively used as the control measures that implicates the productivity and capital investments based on the particular effected case.

e)the effect that control measues of trying a less risky option and preventing the access of the hazards and organising your work to reduce exposure to the hazard and issuing protective equipment.

f)the payback period is the amount of time required for cash inflows generated by a project to offset its initial cash outflow and there are two ways to calculate the payback period,which are the averaging mathod.Divide the annualized expected cash inflows into the expected initial expenditure for the asset.

g)The shortest payback period is generally considered to be the most acceptable rule to follow when a company is deciding between one or more projects or investments and the longer the money is tied up,the less opportunity there is to invest it elsewhere.