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Risk Matrix Integrating Risk Attitudes Based on Utility Theory

Published on Aug 1, 2015in Risk Analysis2.56
· DOI :10.1111/risa.12400
Xin Ruan6
Estimated H-index: 6
(Tongji University),
Zhiyi Yin1
Estimated H-index: 1
(Tongji University),
Dan M. Frangopol52
Estimated H-index: 52
(Lehigh University)
Cite
Abstract
Recent studies indicate that absence of the consideration of risk attitudes of decisionmakers in the risk matrix establishment process has become a major limitation. In order to evaluate risk in a more comprehensive manner, an approach to establish risk matrices that integrates risk attitudes based on utility theory is proposed. There are three main steps within this approach: (1) describing risk attitudes of decisionmakers by utility functions, (2) bridging the gap between utility functions and the risk matrix by utility indifference curves, and (3) discretizing utility indifference curves. A complete risk matrix establishment process based on practical investigations is introduced. This process utilizes decisionmakers’ answers to questionnaires to formulate required boundary values for risk matrix establishment and utility functions that effectively quantify their respective risk attitudes.
  • References (23)
  • Citations (15)
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References23
Newest
Published on Jan 1, 2014in Risk Analysis2.56
J. Holt17
Estimated H-index: 17
(Imperial College London),
A. W. Leach10
Estimated H-index: 10
(Imperial College London)
+ 5 AuthorsJohn D. Mumford22
Estimated H-index: 22
(Imperial College London)
Utility functions in the form of tables or matrices have often been used to combine discretely rated decision-making criteria. Matrix elements are usually specified individually, so no one rule or principle can be easily stated for the utility function as a whole. A series of five matrices are presented that aggregate criteria two at a time using simple rules that express a varying degree of constraint of the lower rating over the higher. A further nine possible matrices were obtained by using a...
Published on Nov 1, 2013in Risk Analysis2.56
David J. Ball14
Estimated H-index: 14
(Middlesex University),
John Watt18
Estimated H-index: 18
(Middlesex University)
Risk matrices are commonly-encountered devices for rating hazards in numerous areas of risk management. Part of their popularity is predicated on their apparent simplicity and transparency. Recent research, however, has identified serious mathematical defects and inconsistencies. This article further examines the reliability and utility of risk matrices for ranking hazards, specifically in the context of public leisure activities including travel. We find that (a) different risk assessors may as...
Published on Nov 1, 2013in Risk Analysis2.56
Genserik Reniers23
Estimated H-index: 23
(University of Antwerp),
KennethSORENSEN22
Estimated H-index: 22
(University of Antwerp)
On the basis of the combination of the well-known knapsack problem and a widely used risk management technique in organizations (that is, the risk matrix), an approach was developed to carry out a cost-benefits analysis to efficiently take prevention investment decisions. Using the knapsack problem as a model and combining it with a well-known technique to solve this problem, bundles of prevention measures are prioritized based on their costs and benefits within a predefined prevention budget. T...
Published on Aug 1, 2013in Applied Mechanics and Materials
Chao Jue Yi1
Estimated H-index: 1
(Southwest Jiaotong University),
Chao Yu Zheng1
Estimated H-index: 1
(Southwest Jiaotong University),
Qi Hao Fu1
Estimated H-index: 1
On the basis of the analysis of investment project risk evaluation methods, this article mainly discusses the risk matrix method in the application of risk assessment in risk investment project and constructs the risk matrix for risk assessment in risk investment project and designs risk matrix based on the process of risk assessment, hoping to provide a scientific, rational, easy assessment method for risk assessment in risk investment project.
Published on Jan 1, 2013in Safety Science3.62
E.B. Abrahamsen and Terje Aven48
Estimated H-index: 48
(University of Stavanger),
Genserik Reniers23
Estimated H-index: 23
(Katholieke Universiteit Leuven)
This paper is a discussion paper and consists of two parts: first an introduction by the Associate Editor Genserik Reniers discussing the reason behind this article and classifying such a type of paper, and second the contribution by Terje Aven, with following abstract: The application of probability is of paramount importance for the risk and safety fields. But few of the papers in these fields explain what the probabilities introduced mean. The rules of probability are referred to, but very ra...
Published on Sep 1, 2012in Reliability Engineering & System Safety4.04
E.B. Abrahamsen and Terje Aven48
Estimated H-index: 48
(University of Stavanger)
In various industries it is common to use risk acceptance criteria to support decision-making. The criteria are seen as absolute in the sense that measures need to be implemented if the criteria are not met. In Norway the petroleum regulations state that the operator has a duty to formulate risk acceptance criteria relating to major accidents and to the environment. This practice is in line with the internal control principle, which states that the operator has the full responsibility for identi...
Published on Dec 1, 2010in Safety Science3.62
H. Ni1
Estimated H-index: 1
(CAS: Chinese Academy of Sciences),
Anthony Chen1
Estimated H-index: 1
(CAS: Chinese Academy of Sciences),
Ningshan Chen1
Estimated H-index: 1
(ISEP: Instituto Superior de Engenharia do Porto)
This paper introduces the basic concepts of risk as the research background and reviews a widely applied semi-quantitative tool for risk assessment, namely risk matrix approach (RMA) as well as its typical variations. Based on the deep analysis of the essence and defects of RMA, some extensions on risk matrix approach are presented and their superiorities compared with the related quondam methods are demonstrated by a case study. The features and advantages of the new extensions are discussed an...
Published on Oct 1, 2010in Safety Science3.62
Ove Njå9
Estimated H-index: 9
(University of Stavanger),
Svein Håkon Fjelltun1
Estimated H-index: 1
Safety measures and related costs and benefits have been widely discussed and analysed in academic circles and by the authorities and industrial sectors. The study reported in this paper addresses these aspects from a cognitive based perspective. Risk management is about dealing with the conflict between production and safety. Enterprises which spend too much on safety will meet bankruptcy, and those not concerned with safety measures will meet with severe accidents and related damage. Inspired ...
Published on Feb 1, 2010in European Journal of Operational Research3.81
Anderson J. Brito4
Estimated H-index: 4
(UFPE: Federal University of Pernambuco),
Adiel Teixeira de Almeida22
Estimated H-index: 22
(UFPE: Federal University of Pernambuco),
Caroline Maria de Miranda Mota9
Estimated H-index: 9
(UFPE: Federal University of Pernambuco)
This paper proposes a multicriteria model for assessing risk in natural gas pipelines, and for classifying sections of pipeline into risk categories. The model integrates Utility Theory and the ELECTRE TRI method. It aims to help transmission and distribution companies, when engaged in risk management and decision-making, to consider the multiple dimensions of risk that may arise from pipeline accidents. Pipeline hazard scenarios are presented, and it is argued that the assessment of risk in nat...
Cited By15
Newest
Donghong Tian (SWPU: Southwest Petroleum University), Chunlan Zhao (SWPU: Southwest Petroleum University)+ 1 AuthorsMeng Zhou (SWPU: Southwest Petroleum University)
Abstract This paper mainly proposes a novel method to construct a risk matrix for assessing safety risks in oil and gas industry. There are often multiple experts and multiple criteria involved in safety risk assessment problems and the assessment data are often given in the form of interval numbers. In order to better assess risks, the definition of interval number with distribution function and utility function is proposed in this paper. The frequency and the consequence of risk are only two n...
Published on Mar 31, 2019in Journal of Risk Research1.70
Chunbing Bao3
Estimated H-index: 3
,
Jie Wan1
Estimated H-index: 1
+ 1 AuthorsJianping LiXiaolei19
Estimated H-index: 19
AbstractRisk matrices have been proven as useful risk management tools, especially in the cases where data are not sufficient. Current usage of risk matrices in both literature and practice is related to single risk assessment. However, sometimes the decision makers care more about the overall risk consisting of several of single risks, which is in the scope of the aggregation of single risks measured by risk matrices. Unfortunately, two notions, namely, incomparability of different qualitative ...
Published on Feb 28, 2019in Sustainability2.59
Anna Kosovac2
Estimated H-index: 2
,
Brian Davidson11
Estimated H-index: 11
,
Hector Malano19
Estimated H-index: 19
A survey of 77 water practitioners within Melbourne, Australia, highlighted the lack of objectiveness within current risk scoring processes. Each water authority adopted similar processes, all of which adhere to the ISO31000 standard on Risk Management, and these were tested within this study to determine the “objective” nature of technical risk assessments such as these. The outcome of the study indicated that current risk measurement approaches cannot be seen as objective. This is due to the h...
Published on Dec 1, 2018in Automation in Construction4.31
Yasaman Shahtaheri1
Estimated H-index: 1
(VT: Virginia Tech),
Madeleine M. Flint3
Estimated H-index: 3
(VT: Virginia Tech),
Jesús M. de la Garza7
Estimated H-index: 7
(VT: Virginia Tech)
Abstract The tradeoffs between the economic, social, and environmental aspects of infrastructures are not easily evident to decision makers and stakeholders in the initial design phase. This lack of insight, often leads to designs that compromise the social and environmental aspects of designs in order to reduce the initial construction costs of infrastructure assets. In addition to the lack of insight, currently available methods for analyzing alternative infrastructure configurations with resp...
Published on Sep 1, 2018in Knowledge Based Systems5.10
Donghong Tian1
Estimated H-index: 1
(SWPU: Southwest Petroleum University),
Bowen Yang1
Estimated H-index: 1
(SWPU: Southwest Petroleum University)
+ 1 AuthorsYi Zhao1
Estimated H-index: 1
(SWPU: Southwest Petroleum University)
Abstract This paper mainly proposes a novel method to establish a risk matrix for assessing safety risks in oil and gas industry. The frequency and the consequence of risk are two desired criteria in the establishment process of a risk matrix. In fact, more than two criteria and several experts are often involved, so a multi-criteria and multi-experts information integration (MEMCII) model is constructed in this paper. Firstly, the method of the determination of experts’ weights is introduced to...
Published on Aug 1, 2018in Computers & Industrial Engineering3.52
Abroon Qazi (SUNY: State University of New York System), Pervaiz Akhtar7
Estimated H-index: 7
(University of Hull)
Abstract There is a major research gap of developing a supply chain risk management process integrating the risk appetite of a decision maker and all stages of the risk management process within an interdependent network of systemic risks. We introduce an iterative process, namely risk matrix driven supply chain risk management, to bridge this gap. We make use of the recently introduced concept of utility indifference curves based risk matrix to capture the risk attitude of a decision maker. We ...
Published on Jul 1, 2018in Sports Medicine7.58
Colin W Fuller36
Estimated H-index: 36
The aim of this review was to provide insights into and a critical assessment of injury burden, risk matrices and risk contours in the context of team sports. Injury burden is the product of injury incidence and mean severity, and is normally reported as days’ absence/1000 player-hours. An important feature of injury burden is that equal values can reflect quite different numerical combinations of injury incidence and severity. The timeframe over which injury burden affects a team depends on the...
Published on Apr 1, 2018in Ocean Engineering2.73
Yan Liu2
Estimated H-index: 2
(Lehigh University),
Dan M. Frangopol52
Estimated H-index: 52
(Lehigh University)
Abstract Ship grounding is a major maritime hazard that poses great consequences. Risk and sustainability associated with ship grounding need to be rationally assessed for a safe and sustainable maritime traffic. This paper presents a probabilistic risk analysis of ship grounding hazard considering damage caused by bottom penetration. Sustainability is introduced for ship grounding risk analysis for a synthesized assessment of the damage consequences. Sustainability indicators assess the economi...
Published on Feb 1, 2018in Journal of Space Safety Engineering
David M. Lengyel (GW: George Washington University), Thomas A. Mazzuchi25
Estimated H-index: 25
(GW: George Washington University)
Abstract This paper will examine the typical decision process that National Aeronautics and Space Administration (NASA) project management team members utilize to rank and then accept residual risks before the launch of a spacecraft. Interviews of two flight project management teams at NASA's Goddard Space Flight Center (GSFC) were conducted to understand the structuring of these decisions. Decision attribute preferences were elicited using a lottery technique and a multi-attribute preference mo...
Published on Feb 1, 2018in International Journal of Production Economics5.00
Abroon Qazi5
Estimated H-index: 5
,
Alex Dickson6
Estimated H-index: 6
+ 1 AuthorsBarbara Gaudenzi6
Estimated H-index: 6
(University of Verona)
The paper develops and operationalises a supply chain risk network management (SCRNM) process that captures interdependencies between risks, multiple (potentially conflicting) performance measures and risk mitigation strategies within a (risk) network setting. The process helps in prioritising risks and strategies specific to the decision maker's risk appetite. The process is demonstrated through a case study conducted in a global manufacturing supply chain involving semi-structured interviews a...