Analytical Methods for Risk Management: An Engineering Systems Perspective

Abstract

Risk is a driving consideration in decisions that determine how engineering systems are developed, produced, and sustained. Critical to these decisions is an understanding of risk and how it affects the engineering of systems. The process of identifying, measuring, and managing risk is known as risk management. Applied early, risk management can expose potentially crippling areas of risk in the engineering of systems. This provides management time to define and implement corrective strategies. Moreover, risk management can bring realism to technical and managerial decisions that define a system's overall engineering strategy. This paper presents an introduction to processes and analytical practices in the management of risk, as it arises in the engineering of systems. These practices have evolved from a variety of systems engineering projects and initiatives. Traditional engineering systems and risk analysis approaches are discussed.

Energy-efficiency versus resilience: risk awareness view on dimensioning of optical networks with a sleep mode

“…During risk management, it is possible to trade off these opposing aspects. If the client is riskneutral [31], the best way is to express them with the same monetary measure. If there is a known energy profile, the energy cost can be easily expressed monetarily, and the way to express the monetary impact of not conforming to the client's needs is to use penalties.…”

“…It is also coherent [4], a useful feature in the context of convex optimization [17]. Nevertheless, it does not grasp the variability of the impact or extreme values (i.e., two totally different distributions may have the same mean value [31]). Hence, quantile risk measures have been proposed.…”

A tool for integrating time, cost and quality perspectives in Probability Impact (P-I) Tables

“…The P-I Table has been further developed by MITRE Cooperation, who developed a software package covering the functions of the P-I Table as well as a Borda index sorting method (Ni et al, 2010). The Borda index sorting method describes the application of the Borda algorithm (developed by the French mathematician Jean-Charles Chevalier de Borda in the 17th century) to risk management (Garvey, 2009). The Borda algorithm, also known as Borda Voting Method, was originally used in voting theory to rank candidates according to their votes (ibid).…”

“…The extention of the Borda tool beyond the two criteria of probability and impact has been detailed by Garvey (2009) through the use of five criterion (probability, cost, schedule, technical performance and programmatics). One feature of the Borda tools is that it ranks several risks relative to each other.…”

A New Strategic Risk Reduction For Risk Management

“…Therefore, all projects involve some level of risk, even if similar projects have been completed successfully; risk is a situation that, if it occurs, adversely affects the goals of a project [2]. Risk management is important for any project because of the uncertainties that all projects face.…”