Abstract
AbstractRisk is constantly present in the engineering design of systems. It influences all lifecycle phases of every system and manifests itself through a system's cost, schedule, and performance attributes. These attributes are expressed through a system's design requirements and therefore provide a measure of how successful a system is. Design requirements are stated by means of a design threshold and a design goal. The distance between the threshold and the goal, known as the design space, provides not only a measure of system performance, but also an understanding of system risk and risk management. Risk management is the sum of activities undertaken to understand, identify, classify, measure, and mitigate risk in the engineering design of systems. This paper presents an output‐oriented view of risk and risk management. It provides a taxonomy of risks that exploits the relationship between risk and performance and then discusses several hedging strategies that serve to manage risk in the engineering design of systems.
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