Financial risk of environmental problems is the key to many important
business decisions within the mining industry. Massive uncertainty
makes it difficult to choose a strategy for managing environmental
problems to reduce corporate financial exposure to environmental
impairment. A correct and practical method exists to clarify the risks and
help make decisions. A case study on an insurance problem illustrates the
method.
The approach used is to translate existing data on environmental
problems into probabilistic expressions of financial risk, and organise the
expressions to reveal alternative solution strategies for the insurance
problem.