Enterprise risk management has always been important. However, the events of the
twenty-first century have made it even more critical. Nature has caused massive
disruption, such as the tsunami that hit Fukushima in March 2011. Terrorism has
seemed to be on the rise, with attacks occurring in the USA, Europe, and Russia
with greater regularity, not to mention the even more common occurrences in the
Middle East. Human activities meant to provide benefits such as food modi?cation
and medicine have led to unintended consequences. The generation of energy
involves highly politicized trade-offs between effcient electricity and carbon
emissions, with the macro-level risk of planetary survival at stake. Oil transport
has experienced traumatic events to include the BP oil spill in 2010. Risks can arise
in many facets of business. Businesses in fact exist to cope with risk in their area of
specialization. But chief executive officers are responsible to deal with any risk fate
throws at their organization.
The first edition of this book was published in 2010, reviewing models used in
management of risk in nonfinancial disciplines. It focused more on application
areas, to include management of supply chains, information systems, and projects.
It included review of three basic types of models: multiple criteria analysis,
probabilistic analysis, and business scorecards to monitor risk performance. This
second edition focuses more on models, with the underlying assumption that they
can be applied to some degree to risk management in any context. We have updated
case examples and added data mining support tools. When we return to look at risk
management contexts, we demonstrate use of models in these contexts. We have
added chapters on sustainability and environmental damage and risk assessment.