Pan European Networks - Horizon 2020 - page 105

evident. The principle applied to security investment decision making
sees management as more inclined to invest in production, which is
perceived as a certain gain, compared to prevention, where the benefits
are seen as uncertain. Management is also more inclined to risk a very
unlikely major disaster, which is seen as an uncertain loss, than to make
the major security investments required to prevent such a disaster,
because this investment is seen as a certain loss. Security risk managers,
as well as top managers, may also let their decision judgement be
influenced by this psychological bias. Hence, the loss aversion principle
should be taken into account when operational security decisions are
being made. More research is needed in this regard.
Operational security, or the avoidance of intentionally caused losses,
should simply be seen as part of the business of making a profit or
benefit. In this case, the profit is a hypothetical profit because the losses
have been avoided and thus never actually happened. Nevertheless,
these profits or benefits are real and can be calculated, and the sums at
stake are many times higher than is generally believed. In any case, the
existing gap of academic knowledge on operational security investment
decision making needs to be filled. The gap is wide due to the complexity
and broadness of the topic and due to the variety of different viewpoints,
disciplines, perceptions and stakeholders involved. Within the Safety and
Security Science Group of TU Delft, we are investigating these pivotal
operational security decision making problems from an interdisciplinary
point of view.
certain recommendations. This is possible for
every type of risk. Furthermore, economic
approaches and processes allow organisations
to hide behind ‘rationality’ and ‘objectivity’ if
the recommendations following an economic
assessment are pursued without thorough
consideration. In principle, economic assessments
are not necessarily to be carried out for
measuring the financial aspects of security
investments. The focus of economic-based
recommendations should be put on selecting
the most optimal security investments. The aim
is to improve the operational security of an
organisation in the most optimal way, thereby
considering financial aspects. Carrying out an
economic assessment with respect to security
is not about figures, although managers
sometimes tend to be blinded by the numbers
obtained. The figures should always be
checked for their meaningfulness, and if so,
they should be explained and interpreted.
However, despite its disadvantages, there is no
alternative available for economic assessments,
unless being naïve about the financial aspects
of operational security in a chemical company.
Such naïvety may lead to imbalance in two
directions: either one has an unclear view of the
possible losses due to a lack of security, and
security investments are inadequate (which
leads to an undesired and dangerous situation),
or one invests much more in security than
would be recommended from a rational,
economic point of view (which leads to an
economic suboptimal situation). Either way, to
support and continuously improve decision
making about security measures, economic
assessments need to be made. The right way
forward is not to reject the economic approach
in security decision making, but to improve the
methods, data, information, concepts and their
use. The calculations need to be made more
accurate, and one needs to keep working until
an economic tool is obtained that has the high
degree of reliability and validity that is required.
Psychology
Psychology further complicates the security
investment decision making problem. Due to
the psychological principle of ‘loss aversion’,
the fact that people hate to lose, security
investments to deal with highly unlikely events
such as terrorist attacks in the chemical
industry are indeed not at all intuitive and
Professor Dr Genserik Reniers
Delft University ofTechnology
B R OW S E
H O R I Z O N
2 0 2 0
H O R I Z O N 2 0 2 0 P R O J E C T S : P O R TA L
I S S U E S I X
105
I N D U S T R I A L S E C U R I T Y
The psychological
principle of ‘loss
aversion’ can
significantly impact
security investment
decision making
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