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Using portfolio optimisation to calculate the efficient relationship between maritime port security residual risk and security investment

Talas, Risto; Menachof, David

Authors

Risto Talas

David Menachof



Abstract

The research employs an adaptive cross-disciplinary research strategy in an industrial example to address container port facilities’ inability to assess whether their security systems are efficient. The research combines subjective assessments of the performances of the port facilities’ security systems with estimates of terrorism risk from a specialist terrorism underwriter. The research constructs the optimum theoretical portfolio of the three different security systems (access control, biometrics and detection systems) drawn from six different container port facilities owned by a major international ports company to calculate the efficient relationship between maritime port security residual risk and security investment. The research builds on the existing literature and proposes new definitions of security, port security, port security risk and port security risk management. The research also highlights the managerial impact of a chief financial officer’s ability to assess the efficiency of security budget allocation through the residual risk – security investment ratio. The contribution which the research makes is in terms of modelling and measurement of the impact of the introduction of new port security technology and changes to background port security threat levels. The research also juxtaposes for the first time the performance of port security systems with estimates of terrorism risk from a specialist Lloyd’s terrorism underwriter.

Publication Date 2014
Journal International journal of shipping and transport logistics
Print ISSN 1756-6517
Electronic ISSN 1756-6525
Publisher Inderscience
Peer Reviewed Peer Reviewed
Volume 6
Issue 3
Pages 314-338
APA6 Citation Talas, R., & Menachof, D. (2014). Using portfolio optimisation to calculate the efficient relationship between maritime port security residual risk and security investment. International Journal of Shipping and Transport Logistics, 6(3), 314-338 . https://doi.org/10.1504/IJSTL.2014.060788
DOI https://doi.org/10.1504/IJSTL.2014.060788
Keywords Security, Port security, Port security risk, Port security risk management, Terrorism, Efficient frontier, Portfolio analysis, ISPS code, Port facility security officer, Company security officer, Benefit-cost analysis, Residual security risk, Expected los
Publisher URL http://www.inderscienceonline.com/doi/abs/10.1504/IJSTL.2014.060788
Additional Information This is the authors accepted manuscript of an article published in International journal of shipping and transport logistics, 2014, v.6 issue 3.

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