Governing ignorance: emerging catastrophic risks—industry responses and policy frictions

The growing interconnections between people, markets and networks together with the development of new technologies have increased the frequency and impact of large-scale disasters around the globe. Many of these events, defined as emerging catastrophic (or systemic) risks, have no previous record. At the same time there is a strong probability that their frequency and impact will increase in the future. This paper takes a governance perspective by assuming that policy actions should be designed to cope with ignorance and large-scale losses, being the primary features characterising such emerging catastrophic risks. Precisely, the governance activity should aim both at expanding the industries’ capacity to absorb losses and at acquiring more information about frequency and impact of such losses. However, it appears that some solutions may conflict with policy objectives. In particular, direct governmental interventions to compensate victims and stringent antitrust policy goals might block the development of a market for first-party property insurance for emerging systemic risks. This paper elicits crucial points that require further elaboration by policy-makers, thereby stressing the importance of providing a workable legal definition of such line of risk that embraces the precautionary principle

The Determinants of Total Factor Productivity in European Union

WOS: 000444369900008The aim of this study is to investigate the effect of construction sector on Total Factor Productivity (TFP) in European Union economy by using panel data analysis and analyzing cross-sectional data of 24 European Union countries for the period 2003-2014. To this end, building permits, house prices, and construction index are used to examine the effect of housing sector dynamics and construction sector productivity on the total factor productivity in the general economy. The aim of study is to explain variation in the TFP across countries by the intensity of construction sector activities. It is observed that the coefficients of changes in nominal house prices and building permits are positive, and they have significant relationship with TFP as the coefficient of construction index is negative. Positive coefficients of changes in nominal house prices and building permits support our model. Construction index that measures that how costly the construction activity is also expected to have negative parameters that imply that as construction activity becomes more costly the contribution to TFP growth becomes less. That is, house construction and permits and house demand have positive effects on total factor productivity

An Integrated Disaster Relief Supply Chain Network Model with Time Targets and Demand Uncertainty

As the number of natural disasters and their impacts increase across the globe, the need for effective preparedness against such events becomes more vital. In this paper, we construct a supply chain network optimization model for a disaster relief organization in charge of obtaining, storing, transporting, and distributing relief goods to certain disasterprone regions. Our system-optimization approach minimizes the total operational costs on the links of the supply chain network subject to the uncertain demand for aid at the demand points being satisfied as closely as possible. A goal programming approach is utilized to enforce the timely delivery of relief items with respect to the pre-specified time targets at the demand points. A solution algorithm for the model is also provided. A spectrum of numerical examples illustrates the modeling and computational framework, which integrates the two policies of pre-positioning relief supplies as well as their procurement once the disaster has occurred. © Springer International Publishing Switzerland 2015