Valuation of Risk Mitigation In Industrial Process Safety

This paper researches the academic and market state of the art relative to financial quantification of risks in Process Safety and develops a Real Options methodology for the valuation of these risks. Contingent asset valuation methodologies are used, such as insurance and contractual clauses, using in particular the Real Options approach. This makes it possible to correctly quantify projects and assets under an environment of uncertainty, in the case of events such as accidents, or equipment breakdown, of low statistical occurrence, but with harmful and loss-incurring consequences. And also investments to mitigate these risks, thus reducing the negative financial effect of the occurrence of these events.

Carlos Bastian-Pinto
IAG Business School, Pontifícia Universidade Católica of Rio de Janeiro
Brazil

Leonardo Gomes
IAG Business School, Pontifícia Universidade Católica of Rio de Janeiro
Brazil

Brandão Luiz
IAG Business School, Pontifícia Universidade Católica of Rio de Janeiro
Brazil