Business Risk Management Based on a Service Portfolio Approach for an Equipment-Providing Service

Abstract

In rccent ycars. companics havc bccamc rcluctant to acccpt the risk assaciatcd with investment in equipment. Therefore, equipment-providing services, where an outside provider owns the cquipmcnt and collects fces for its use from thc user, have become increasingly popular because they reduce the users' investment risks. In exchange for receiving these fees, an equipment provider takes on part of each user's operating risk. For such 3 service to be profitable, though, the supplier must be able to accurately determine the appropriate risk and measure how much of this risk it is accepting instead ol' the user. It is critical that the equipment provider have an effective means to control the risk and understand its potential negative el'l'ecc.