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Firms grant non‐tradable stock options to their employees as an incentive device. Is the cost of issuing these options equal to the amount the company would receive if it sold the same options to outside investors? The evaluation of this cost is the main objective of this article. The options granted to employees are not tradable, due to the incentive scheme to which they are related. A non‐tradable option is an asset that cannot be evaluated with standard Black‐Scholes formulas.

The article adopts standard option pricing, introducing some corrections since Black‐Scholes formulae do not apply. The new formulae show the dependence of option values on how diversified both the employees and the firm are; and the influence that the incentive to work by employees has on the stock price.

Once stock options satisfy a participation constraint, they can be granted to employees who stand to gain. However, they do not provide a net benefit in all circumstances to shareholders since they may gain, break even, or lose. Even though in many cases stock options may appear to be an inefficient way to stimulate work effort, in start‐ups and entrepreneurial firms they turn out to be quite beneficial.

Stock option opportunity costs have to be valued taking into account the extent of their non‐tradability and the incentive they provide to employees.

The article introduces a correction for valuing non‐tradable stock options. This permits us to measure properly the opportunity cost of stock options, which is often mis‐specified.

The purpose of this paper is to reflect on what can be learned about disaster risk reduction (DRR) from the L’Aquila trial of scientists. The court case was initiated because of a controversial meeting on 31 March 2009 of the Major Risks Committee (MRC), held under the auspices of the Italian Department of Civil Protection. The purpose of the meeting was to consider (prior to the fatal earthquake of 6 April 2009) disaster risk in the L’Aquila area, which was being affected by an earthquake swarm since October 2008.

The authors undertook a document analysis of trial materials, and a review of academic and media commentary about the trial.

The legal process revealed that disaster governance was inadequate and not informed by the DRR paradigm or international guidelines. Risk assessment was carried out only in a techno-scientific manner, with little acknowledgement of the social issues influencing risks at the local community level. There was no inclusion of local knowledge or engagement of local people in transformative DRR strategies.

Most previous commentary is inadequate in terms of not considering the institutional, scientific and social responsibilities for DRR as exposed by the trial. This paper is unique in that it considers the contents of the MRC meeting as well as all trial documents. It provides a comprehensive reflection on the implications of this case for DRR and the resilience of peoples and places at risk. It highlights that a switch from civil protection to community empowerment is needed to achieve sustainable outcomes at the local level.