The paper "The Most Effective and Widely Used Methods of Risk Analysis" is an outstanding example of management coursework. Risks can have destructive effects on any organisation and people. For this reason, regulatory bodies require organisations to identify hazards and put in place effective risk assessment measures to curb whichever risks that may possibly occur. Some activities are more risk-averse than others and hence call for detailed risk assessment. Numerous methods have been developed to help out organisations make out potential risks they possibly will face in their day to day operations (Benson & Twigg, 2004).
This report reviews some of the most effective and widely used methods of risk analysis. To give the report a lively outfit, the report analyses the methods of risk assessment in relation to Leighton Holdings, a construction company based in Australia. The company was chosen because construction operations are among the highly risk-averse activities that require an in-depth risk assessment. The company employs a huge number of people, about 56, 000 individuals. To draw, hold on to and motivate this huge number of employees, Leighton Holdings has got to indicate that it is able to guarantee their safety as well as the safety of others at large.
The company too runs sensitive operations such as mining that could be very detrimental to the environment if potential risk factors are not assessed well and the correct measures put in place to counter the risks (Leighton Holdings, 2014). Ahead of analysing the various methods employed in risk assessment, the report first defines what hazard and risk assessment entails. Hazard and Risk Assessment Hazard and risk could literally be taken as synonyms.
However, the words have a slight difference between them. A hazard is probable harm that may well crop up from native property or nature of something to cause damage whereas risk is the possibility that somebody or something of value will be harmfully affected in a particular way by the hazard. In other words, the risk could as well be defined as "the possibility of danger" (ECLAC, 2003).
Acharya, V., Pedersen, L., Philippon, T., and Richardson, M. 2010. Measuring Systemic Risk. DP Stern Business School, NYU.
Andrews, J. D. and Dunnett, S. J. 2000. Event Tree Analysis Using Binary Decision Diagrams. IEEE Trans. Reliability, 49(2): 230–238
Benson, C. and Twigg J. 2004. Measuring Mitigation: Methodologies for Assessing Natural Hazard Risks and the Net Benefits of Mitigation - A Scoping Study. Provention Consortium: Geneva.
Chow, G., and Kritzman, M. 2001. Risk Budgets. Journal of Portfolio Management, 27: 56-60.
Crispin, P. 2003. Applying Utility Theory to Project Risk Management. Project Management Journal.
ECLAC, 2003. Handbook for Estimating the Socio-economic and Environmental Effects of Disasters. ECLAC, Mexico City.
Gowdy, J. 2007. Toward an experimental foundation for benefit-cost analysis. Ecological Economics 63: 649-655.
Leighton Holdings, 2014, Profile, Retrieved 8 March 2014,
Mechler, R. 2005. Cost-Benefit Analysis of Natural Disaster Risk Management in Developing and Emerging Countries. Manual. Working paper, GTZ, Eschborn.
Park, S.H. and Vining, G.G. 2000. Statistical Process Monitoring and Optimization, Marcel Dekker, New York.
Scherer, B. 2007. Portfolio Construction and Risk Budgeting, 3rd edn. Risk Books, London.
Zhu, S., Li, D., and Sun, X. 2010. Portfolio selection with marginal risk control. The Journal of Computational Finance 14(1), 3–28.