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9.3.1 Prime Value Method to Prioritize Risk Handling Strategies
Author(s) -
Venkatesh Srini,
Noller David K.
Publication year - 2008
Publication title -
incose international symposium
Language(s) - English
Resource type - Journals
ISSN - 2334-5837
DOI - 10.1002/j.2334-5837.2008.tb00861.x
Subject(s) - prime (order theory) , rank (graph theory) , risk analysis (engineering) , value (mathematics) , liberian dollar , operational risk , computer science , risk management , value at risk , actuarial science , operations research , business , finance , mathematics , machine learning , combinatorics
Funding for implementing risk handling strategies typically is allocated according to either the risk‐averse approach ( the worst risk first) or the cost‐effective approach (the greatest risk reduction per implementation dollar first). This paper introduces a prime value approach in which risk handling strategies are prioritized according to how nearly they meet the goals of the organization that disburses funds for risk handling. The prime value approach factors in the importance of the project in which the risk has been identified, elements of both risk‐averse and cost‐effective approaches, and the time period in which the risk could happen. This paper also presents a prioritizer spreadsheet, which employs weighted criteria to calculate a relative rank for the handling strategy of each risk evaluated.