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SYMPOSIUM BRIEF

PROGRAM ON GLOBAL SECURITY


et21.rutgers.edu
www.et21symposium.org MARCH 2 010

Developing Composite Measures


in Global Risk Assessment
Yasemin Gaziarifoglu is The Evolution of Risk Assessment and Decision Making
a 2nd year Ph.D. student
in the Criminal Justice In conventional methodology, risk assessment is defined as a “methodology to deter-
program at Rutgers mine the nature and extent of risk by analyzing potential hazards and evaluating exist-
University. Prior to ing conditions of vulnerability that together could potentially harm exposed people,
undertaking her graduate property, services, livelihoods and the environment on which they depend” (UN/
study at Rutgers, Ms. ISDR, 2009:26).
Gaziarifoglu received her Using the idea of “risk conflation”, we can see a transition towards a more ho-
M.A. degree in Forensic listic risk assessment and decision-making approach where identification and prioriti-
Science at Istanbul
zation of risks is based on the assumption that “risks are rapidly transmitted across
University Institute of
geographical and systemic boundaries” (World Economic Forum, 2006:6). (See Fig-
Forensic Sciences with
her thesis titled “Fear of
ure 1)
Crime and Perceived
Risk of Crime”. She
holds her B.A. degree in
Sociology and
Psychology from Middle
East Technical
University, Turkey.
Currently she is working
as a research assistant for
Rutgers Institute on
Corruption Studies and
Rutgers Center on Public
Security and teaching an
undergraduate level
course on Crime and
Crime Analysis. Her
research interests include
systemic and local Figure 1. Evolution of Risk Assessment and Primary Decision Making  
analysis of corruption,
activity spaces of
offenders, victimization
and risk assessment
methodologies.
190 University Ave, Suite 219 Newark, New Jersey 07102
Tel (973) 353-5416 Fax (973) 353-5074
Developing Composite Measures
Identification of the Risk
In any risk management practice before any counter-measure is implemented, a risk analysis
should be implemented. All risk assessment and decision-making processes, whether from an
individualistic or holistic approach, starts with the identification of the threat or hazard focusing
on the source of the problem or the “problem” itself. This identification is established through
data collection from various resources, therefore the nature of risk identification can be qualita-
tive and/or quantitative.

Prioritization of the Risk


The main aim of risk prioritization is to prioritize the risks identified for risk mitigation as re-
sources for risk mitigation are limited. Similar to the risk identification phase, prioritization of
risks can be qualitative and/or quantitative in nature. However unlike to the risk identification
phase, today’s risk prioritization procedures has started to show a drastic evolution towards a
holistic approach in response to the increasing the connectivity between risks and increasing
homogeneity of risk across the globe. Accordingly, from this point on we’ll discuss real-life
applications of risk prioritization to highlight this methodological transition.

Individual measures
In this very first stage, risk prioritization is established through a process in which the probabil-
ity of the risk event and the consequence of the relevant risk’s occurrence are used to create a
risk factor. Accordingly this risk prioritization application may be seen as an elimination proc-
ess in which relative importance and impact of each risk is calculated to exclude the irrelevant
risks from a pool of risks. In this simple stage of risk prioritization the interactions between
risks are not taken into consideration.
An example for this type may be a simple supply chain risk assessment and evaluation
process in which the risk in the extended supply chain is tried to be identified through prioriti-
zation among different types of risks such as; supply risks, operational risks, demand risks, se-
curity risks, macro risks etc. In this example - assuming a supply chain is vulnerable to many
risks - the risks to which supply chain is most vulnerable are tried to be identified (Manuj and
Mentzer, 2008:133-155).

Composite Measures
This stage constitutes a big leap in risk assessment and risk prioritization as we start to move
along categories of composite measures, the existence of a relationship between risks and the
strength of the relationships are gradually more and more elaborated. This characteristic is piv-
otal in 21st century’s risk assessment as the systemic nature of risk requires an ongoing and it-
erative risk assessment procedure.

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Developing Composite Measures
Cumulative calculation of risks
The basic difference of this category from our first individual measures category is its accep-
tance of the relationships between different risks. Therefore in this category basically every new
condition is assigned the same risk factor and by adding up the ratings of different risk indica-
tors, the final risk is calculated. The classification of the risk ranges is often subjective where
risk analysts and experts identify the thresholds for certain risk categories (such as low risk,
moderate risk and high risk).
An example for this type is the Failed States Index (Foreign Policy) in which countries
are ranked on their global security levels (such as critical, in danger, borderline, stable, and
most stable) according to the total scores of 12 indicators indicated in the index (each indicator
is assigned a value between 0-10, accordingly the total score is the sum of the 12 indicators and
is on a scale of 0-120). Although this index is highly influential as with its structure it attracts
attention to the additive effect of risks (rather than the individual effect of each risk); the index
doesn’t reflect the direction and strength of relationships between different indicators. Addition-
ally with regards to the scoring system: a score of 60 (or any other score) in this scale neither
indicates the weight of indicators nor an existence of a relationship between indicators.

Identification of the relationship between risks


As indicated in the previous section, one of the biggest problems in relation to initial composite
measures of risks is their deficiency to detect relationships between different risk indicators.
Taking this point into consideration some organizations have proposed new risk assessment
models in which the relationships of risks are elaboration. The World Economic Forum’s Risk
Correlation Matrix provides an index in which the interconnectedness of different risks is as-
sessed in terms of correlations. Their correlation matrix shows the strength of the macro corre-
lations perceived by the experts of the relevant global risk report. Although this example repre-
sents a further step in risk assessment with regards to the emphasis on the interconnectedness of
risks through a correlation analysis in which existence of a relationship, and the strength of re-
lationships are taken into consideration, still we cannot understand the dynamics of the rela-
tionship between risks and causal relationships. As these maps only show the positive relation-
ships between risks, the negative relationships which might be important for mitigation efforts
are also omitted from the analysis (World Economic Forum, 2008: 25).

The nature of relationship between risks


Although the correlation analysis of risks through matrixes revolutionizes the way risk assess-
ment is performed, the methodology still lacks some essential components for identifying the
dynamics of relationships between risks. The Global Risk Network’s Risk Interconnection
Maps (World Economic Forum, 2010:35-37) and United Nation’s Global Impact and Vulner-
ability Alert System (GIVAS) Initiative (United Nations, 2009) are the most recent examples
for a more sophisticated risk assessment approach which point out to the complexity and inter-
connectedness of the risks in the 21st century. The main aim of GIVAS as indicated on the UN
website is “a representative but manageable set of global indicators that can provide powerful
signals of changing vulnerabilities on the ground across regions”. In a similar vein, Global
Risk Network tries to establish the same aim through trying to identify the changing dynamics

3 ET21 PROGRAM ON GLOBAL SECURITY March 2010


Developing Composite Measures
of the relationships between different risk events with the ideas of experts from different fields.
These risk interconnection maps not only shows the strength of the relationship between differ-
ent risks but also shows the similarity of correlations, accordingly similar risks.

Conclusion and Discussion


In a nutshell, in our century where the interconnectivity between risks increases in parallel to
globalization, it’s not feasible to manage the global risks with an “individual” and “silo” ap-
proach (World Economic Forum, 2007:25). Accordingly like we don’t have the luxury to deal
with the risk events independent of other individuals, organizations, or countries, we don’t have
the luxury to evaluate them on an individual basis, as well. And this necessity of a systemic risk
approach is reflected in the risk assessment phase of risk management through a more holistic
risk identification and prioritization process exemplified by the composite measures of risks
which takes the strength and nature of relationships between various risks into consideration.
The combination of risks affects all nations and organizations. Furthermore combined risks may
result in consequences which outsize the initial risk assessments. However, since interconnec-
tions between risks complicate prioritization with regards to cost-befit analysis interconnections
require an extended cooperation between different stakeholders a systematic approach to risk
assessment may be challenging for risk mitigation.
Most risks although pertaining to a specific locality or nation directly or indirectly affect
other regions and countries, as well. With the systemic nature of the risk, the cooperation be-
tween governments, public and private sectors and individuals becomes a prerequisite for a
common framework for risk assessment and risk management. However, as indicated earlier
despite the increased interest in developing ways in which threats can be monitored and their
consequences reduced, it is apparent that there is no real common methodology in the ways in
which agencies across threat areas develop and conduct risk assessments. Unsurprisingly,
against the challenges of the fast paced, globalized world and with the lack of a common meth-
odology
 the ample and efficient risk management at a local level, and
 the efficient and unstrained communication of risk data across different levels of the
same organization and different organizations, and
 a “common consent” risk identification and prioritization, and
 (existence of) parties eager to take responsibility for risk, and
 long-term dedications for risk management, and
 an “all satisfying” risk response

seem more like a fantasy than science.

4 ET21 PROGRAM ON GLOBAL SECURITY March 2010


ET21
About ET21
The Rutgers Center for the Study of Emergent Threats in the 21st Century (ET21) is an interdis-
ciplinary center of excellence designed to research a variety of emergent threats to civilians and
offer policy prescriptions that generate suitable responses to these threats through three compo-
nent programs focused on: Global Security, Civil Resistance, and Immigration

ET21 was created in order generate better linkages between the research activity of faculty and
those of students, creating a better prepared and educated cohort of graduates able to compete in
the global marketplace for jobs. By developing a long-term partnership with the programs,
funds and specialized agencies of the United Nations, several national governments, as well as
partner institutions across the globe, ET21 enlarges DGA’s global network of linkages. Current
initiatives involving partner institutions that have recently been initiated but would be housed
under the new Center’s rubric, for example, include Kassel (Germany), Koeceli (Turkey), Sci-
ences Po (France), Viadrina am Oder (Germany) and the University of Warwick (UK).

ET21 is housed under the Division of Global Affairs (DGA) at Rutgers University, Newark.
The growing prominence and prestige of the DGA as a premier interdisciplinary research-
oriented policy program have allowed it to establish itself as a center of excellence in the field
of global affairs, worldwide.

About the Program on Global Security


Large scale threats such as the September 11 terrorist attacks, the emergence of new diseases, and the militariza-
tion of cyberspace in the past few years have raised the awareness of both government decision makers and the
private sector that the vital systems and infrastructures upon which our societies and economies depend on are at
great risk from the complex threats emerging in the 21st Century. ET21 is an initiative begun by the Division of
Global Affairs in an effort to contribute to a better understanding of the structural sources of these threats, and to
identify the kind of policy actions that will need to be adopted to mitigate their consequences. The ET21 center
brings together practitioners, policymakers and scholars to find solutions to the challenges many organizations face
in developing early warning systems, crisis awareness, and response.
The focus of the centers work is divided into four themes related to the study of emergent threats as fol-
lows: Data needs and structures, Threat assessment methodology, Analytics, Visualization
An important aspect of the center’s work is the involvement of students in research and policy develop-
ment. In addition, the center is developing its outreach which includes an initial symposium on the development of
common methodology employed in threat assessment.

Website et21.rutgers.edu Division of Global Affairs

Email ruglobalaffairs
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