Premium
Development Program Risk Assessment Based on Utility Theory
Author(s) -
BenAsher Joseph Z.
Publication year - 2006
Publication title -
incose international symposium
Language(s) - English
Resource type - Journals
ISSN - 2334-5837
DOI - 10.1002/j.2334-5837.2006.tb02839.x
Subject(s) - lottery , risk assessment , outcome (game theory) , risk analysis (engineering) , expected utility hypothesis , value (mathematics) , actuarial science , process (computing) , computer science , mathematics , statistics , mathematical economics , economics , business , machine learning , computer security , operating system
A methodology for risk assessment is introduced based on Utility Theory. The main idea is to quantify the risk consequences by using an equivalent lottery where the probability of getting the worst possible risk outcome is taken as the value representing the risk consequences. This improves the evaluation process by making it more systematic, and justifies the use of the expected value for obtaining the risk factor. The idea is compared with other methods and is demonstrated by a case study.