Our consultancy business helps a diverse range of public and private institutions (including fast-moving consumer goods, pharmaceutical, and the transport and security industries) to embrace risky situations as opportunities rather than threats.
We deal with decision problems in many domains. Much of our research and consultancy is centred around risk-profiling of investors. Other examples of completed projects we have carried out are as follows:
- A conglomerate of insurance companies wanted to know how each member evaluated and viewed extremely rare but potentially very expensive events. We undertook interviews with members of each company to gauge their attitude towards ‘black swan’ or long tailed events, better enabling the companies to understand their attitudes towards risk, thereby allowing them to better estimate the amount of re-insurance they required.
- An oil exploration division of a large multinational energy company was drilling a large ratio of ‘dry’ to successful wells, where the actual number of barrels of oil found was zero or vastly less than predicted. We measured the attitudes towards risk (variance in success rate) of the different personnel involved in exploration, and found that there was a major discrepancy in the utility of the engineers and geologists, with the latter grossly overestimating likely returns of their ‘pet prospects’ (likely a result of a bonus structure which was geared towards ‘big finds’). We advised on a system of value-based reward which better aligned the utility of the geologists with the company’s priorities: to find and exploit ‘bread and butter’ prospects that were needed for the division to survive in an increasingly competitive environment..
- A public body needed to review its expenditure on safety. We studied the utility and attitude to risk of different stakeholders, including the general public, to incidents for which the client had responsibility. We used a ‘willingness to pay’ methodology, deriving the amount that the public was prepared to pay to avoid particular incidents, and we calculated the diminishing returns in public confidence by progressive increments in expenditure. This allowed us to design an evidence-based rational policy to fix the amount spent by the body and constituent private sector organisations on safety measures. They were thus able spend enough to allay public concerns, but were crucially able to avoid the huge costs associated with ‘virtual elimination’ of incidents (for which the public had little appetite for paying).
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