Analysis of Operational Risks in Shipbuilding Industry

Abstract

Our paper emphasizes the opportunities provided both for the academic research and companies by using a proposed model of analyzing the operational risks within business in general and shipbuilding industry in particular. The model aims to display the loss distribution from the operational risk for each business line/ type of event, based on frequency and severity estimation of the events. These estimations are derived mainly from the history logs of internal loss events. The calculations extend over a certain period of time in the future with a certain level of confidence. It should also be mentioned that the proposed model estimates unexpected losses, without making any suppositions concerning the values of the expected and unexpected losses. Several ideas could be extracted by analyzing and synthesizing the theoretical models from available literature. These ideas were analyzed in order to develop a model for operational risk analysis that is adapted to shipbuilding. This paper describes a new model, which can be applied to the naval industry to quantify operational risks.

Keywords

• operational risk
• Monte Carlo simulation
• shipbuilding industry
• severity distribution
• risk events