A comparison of risk measures for accidents in the energy sector and their implications on decision-making strategies

Abstract

Within the broader context of energy security and critical infrastructure protection, the comprehensive assessment of accidents and their related consequences are of high priority for many stakeholders. The risk of accidents is commonly assessed by risk indicators, since they can provide a direct comparison between energy chains and country groups. In this study, Value-at-Risk (VaR), Expected Shortfall (ES) and the Spectral Risk Measures (SRM) are applied within an energy security perspective. In particular, fatality risk indicators are calculated for different characteristics of fossil data sets extracted from the Energy-related Severe Accident Database (ENSAD). The aim is to understand the applicability of such risk measures in a different context and field of application than the financial realm for which they were originally developed. The use of these risk measures could help to facilitate a better understanding of energy accident risks to insurers and other industry stakeholders that normally focus on financial and less infrastructure-related aspects. Furthermore, the pros and cons of these risk measures, and their implications for decision-making strategies are discussed. The results clearly demonstrate the usefulness of VaR, ES and SRM compared to the often used maximum consequence indicator in the evaluation of accident risks in the energy sector.

Comparative Risk Assessment for Fossil Energy Chains Using Bayesian Model Averaging

“…Comparative results can be provided at different levels, from individual countries to different country groups [8,20]. However, the feasible level of resolution is normally determined by the amount of available data in a given study.…”

“…The most common approach to analyze the risk of accidents in the energy sector relies on quantitative measures such as aggregated risk indicators (e.g., fatality rates) [6][7][8], allowing to compare energy chains in a comparative and comprehensive manner [6]. In this context, the calculation of objective risk indicators comprises a valuable element to support decision makers in the assessment of current and future technology portfolios [9].…”

A Fuzzy Based Model for Standardized Sustainability Assessment of Photovoltaic Cells

“…In all energy sectors, risk can be classified under four main categories, based on the severity of the accident and its frequency of occurrence, as follows [49,52,53]:…”

Analyzing and Classifying Risks: A Case-Study in the Furniture Industry

“…However, it can bring important inputs also for the risk of occupational accidents. In fact, VaR was already previously used to describe accident risks in different sectors and activities, such as accidents in energy sector [11] or highway hazmat shipments [12]. In the present study, VaR principles are adopted to identify the most important accident scenarios in the furniture industries.…”

“…The Value-at-Risk (VaR) is a risk measurement tool frequently used in the field of financial management and actuarial risk theory. VaR refers to a loss level that will not be exceeded for a certain confidence level, during a certain period of time [11]. However, it can bring important inputs also for the risk of occupational accidents.…”