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A Handbook of Industrial Ecology

Edited by Robert U. Ayres and Leslie W. Ayres

Industrial ecology is coming of age and this superb book brings together leading scholars to present a state-of-the-art overviews of the subject. Each part of the book comprehensively covers the following issues in a systematic style: the goals and achievements of industrial ecology and the history of the field; methodology, covering the main approaches to analysis and assessment; economics and industrial ecology; industrial ecology at the national/regional level; industrial ecology at the sectoral/materials level; and applications and policy implications.
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Chapter 37: Industrial ecology and risk analysis

Paul R. Kleindorfer


Paul R. Kleindorfer Risk analysis in industrial contexts consists of four integrated processes: (a) identifying underlying sources of risk; (b) determining the pathways by which such risks can materialize; (c) estimating the potential consequences of these risks under various scenarios; and (d) providing the means for mitigating and coping with these consequences. Specific risks, once identified, are usually characterized by the probability of their occurrence and the magnitude of their consequences, but many other attributes of risks may be of interest to individuals affected by these risks. Risks can have both positive and negative outcomes and can occur in any domain of a company’s operations, from engineering to finance. A great deal of work in corporate finance and insurance has gone into the design of efficient risk management instruments for risks that can be monetized (for example, Doherty 2000) and, to the extent that the consequences of these risks are borne by the owners of an enterprise, there are strong incentives for managers to make efficient choices in balancing risks and returns. This is not usually true for industrial risks having safety, health or environmental (SHE) impacts, since these impacts are often borne by the ecosystem and by uninvolved third parties, including future generations. Thus, for SHE risks, market forces are not usually sufficient to motivate a profit-oriented company to operate efficiently. Achieving efficient trade-offs here requires instead that industrial practice be tempered by regulation and public participation. Exactly how...

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