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Research by Reimer Kühn (RK) and collaborators has produced a framework to study and quantify the influence of interactions on risk in complex systems, including default risk in economy-wide networks of financial exposures. This work has had impact on practitioners and professional services dealing with financial risk, including research groups at central banks, who — partly in response to the recent financial crisis — have adopted such network oriented approaches to analyse and quantify systemic risk. The Financial Stability Division at the Bank of England has, for instance, developed refined versions of the network-oriented models proposed by Kühn and collaborators to specifically assess risk in the British banking system.
LSE research on endogenous risk has had impact at both the macro and micro level. At the macro level, it provided input for the design of the counter-cyclical measures and systemic risk surcharges in the Basel III regulations in financial markets. It also provided a significant input to the G20 agenda on financial stability. At the micro level, the research has had a significant role in shaping the thinking and recommendations of the UK Foresight Report on "The Future of Computer Trading in Financial Markets". Through this, the work had a direct impact on Markets in Financial Instruments Directive (MiFID) II, the EU legislation that governs how EU financial service markets operate. The original EC proposal for trading halts in volatile markets — Minimum Resting Times (MRT) — to regulate high frequency trading was dropped and the Foresight proposal of time stamps based on synchronised atomic clocks across trading venues was adopted.
Over the last decade, research by the Department of Geography's King's Centre for Risk Management (KCRM) has helped successive UK governments to reform regulation by making regulatory inspection and enforcement more `risk-based'. Risk-based approaches promise to make regulation more efficient by targeting regulatory activities only at cases that pose unacceptable risks rather than by trying to prevent all possible harms. KCRM research has helped make UK regulation more risk-based in three important ways. First, KCRM research significantly informed the key recommendation of HM Treasury's Hampton Review of Administrative Burdens on Business that all regulatory inspection and enforcement should be risk-based. Second, KCRM supported the implementation of that recommendation when it gained statutory force for almost all regulators in 2008 through practical advice to a number of government departments and agencies. Third, KCRM's impact on regulatory reform was reinforced by HM Government's full acceptance and ongoing implementation of Löfstedt's recommendations to strengthen risk-based regulatory practice in his 2011 Independent Review of Health and Safety Regulation.
LSE research on regulatory enforcement and compliance has challenged the assumption that businesses are capable of self-regulation, particularly in sectors critical to public health such as the food business and particularly in terms of small businesses that rely on government regulations to help them identify and manage business risks. This research became the basis for four specific recommendations on the regulation of food hygiene and safety that emerged from a UK Government inquiry into the 2005 E.coli outbreak. All four recommendations have been implemented and mainstreamed into the practices of the Food Standards Agency (FSA). Collectively, they have contributed to a substantial increase in business compliance with food safety standards and a significant reduction in businesses giving 'cause for concern' around transmission of E.coli and other food-borne pathogens.
Lyme borrelliosis (LB) is on the increase with over 3000 clinically or serologically diagnosed cases/pa in the UK. Alerting the public to LB risk has to be balanced against encouraging or undermining countryside use for health and recreational benefits.
The reach and significance of impact was initially built into the research with end-user stakeholders involved in the study design, interpretation and application of the results to change public and organisations' risk communication practices.
End-user impact has been acknowledged in an independent Economic and Social Research Council (ESRC) evaluation as well as a local authority tick awareness campaign.
QRISK is a new algorithm which predicts an individual's risk of cardiovascular over 10 years. It was developed using the QResearch database and is in routine use across the NHS. It is included in national guidelines from NICE and the Department of Health and in the GP quality and outcomes framework. It is incorporated into > 90% of GP computer systems as well as pharmacy and secondary care systems. The web calculator has been used >500,000 times worldwide. ClinRisk Ltd was incorporated in 2008 to develop software to ensure the reliable widespread implementation of the QRISK algorithm into clinical practice.
RVC's Veterinary Epidemiology, Economics and Public Health team (VEEPH) has been at the forefront of applying and evaluating new techniques for modelling disease risk, for policy and decision makers to use in surveillance and control of animal and zoonotic infections. Application of their recommendations, including European `Commission Decision' legislation, is contributing to ensuring that Europe remains free from African swine fever (ASF). The status of FAO Reference Centre in Veterinary Epidemiology, awarded by the United Nations' Food and Agriculture Organisation in 2012, recognises the RVC as a centre of excellence in this field and reinforces its role in guiding policies relating to animal health.
Credit scoring, the process of estimating the risk of lending to consumers, has traditionally estimated the likelihood of default over a fixed period, usually 12 months. Research carried out at Southampton's School of Management has led to a gradual shift by many financial institutions in the UK and elsewhere towards an alternative method that estimates default over any period. This approach provides accurate risk estimates over any time period. It also allows for the inclusion in the "scorecard" of economic conditions and the lending rates charged — features whose absence from previous scorecards was identified as contributing to the sub-prime mortgage crisis.
Researchers at Brunel developed a new algorithm for the computation of residual risk in industrial explosion protection (IEP) installations in collaboration with Kidde Plc, which later became a part of UTC Fire and Security (UTCFS), a 57.7 billion USD company. This was the first algorithm clearly quantifying the safety integrity level versus cost trade-off in buying an IEP for the process plant owners. As the cost of such an installation varies from £40,000 to £700,000, quantifying this trade-off was a real unmet user need. A commercial implementation of this algorithm by a UK-based software vendor Optirisk Systems is now being used by the 31 strong sales force of UTCFS worldwide, as their main tool for negotiating the sales of IEP installations.
The four Environment Agencies in England & Wales, Northern Ireland, Scotland and the Republic of Ireland have introduced, or are planning to introduce, new strategies for regulating low risk treatment sites and activities. These strategies are based on Black and Baldwin's research. Implementation is planned for 2011-13 onwards. The Irish Environmental Protection Agency has led the way in 2012-13, having already implemented GRID/GRAF in a specific low risk area (domestic waste water).