Risk-informed Decision Making

Abstract

This article presents an overview of the need for inclusion of an effective risk analysis program in a product’s lifecycle. Risk-based technologies (RBT) are tools and processes used to assess and manage the risks of a component—or even of an entire system. One RBT method is risk assessment, which consists of hazard identification, scenario-probability assessment, and consequence assessment. Another method is risk control, which uses failure prevention and consequence mitigation, as well as risk communication. Risk can be quantified by estimating probabilities and consequences in a qualitative manner using expert opinion and communicated using matrices for preliminary screening. There are four primary ways available to deal with risk within the context of a risk management strategy: risk reduction or elimination, risk transfer, risk avoidance, and risk absorbance or pooling. The use of tools such as risk analysis helps enable decision makers to be as informed on the risks involved with each choice as they are with other important parameters of the system such as strategic importance, schedule criticality, cost, and customer satisfaction.