Risk Modeling, Assessment, and Management

Preface to the Fourth Edition ix The Companion Website xv Acknowledgments xvii Part I. Fundamentals of Risk Modeling, Assessment, and Management 1 1 The Art and Science of Systems and Risk Analysis 3 1.1 Introduction / 3 1.2 Systems Engineering / 4 1.3 Risk Assessment and Management / 14 1.4 Concept Road Map / 26 1.5 Epilogue / 35 References / 35 2 The Role of Modeling in the Definition and Quantification of the Risk Function 41 2.1 Introduction / 41 2.2 The Risk Assessment and Management Process: Historical Perspectives / 43 2.3 Information, Intelligence, and Models / 45 2.4 The Building Blocks of Mathematical Models / 47 2.5 On the Complex Definition of Risk, Vulnerability, and Resilience: a Systems?]Based Approach / 51 2.6 On the Definition of Vulnerabilities in Measuring Risks to Systems / 56 2.7 On the Definition of Resilience in Measuring Risk to Systems / 57 2.8 On the Complex Quantification of Risk to Systems / 60 References / 65 3 Identifying Risk through Hierarchical Holographic Modeling and its Derivatives 69 3.1 Hierarchical Aspects / 69 3.2 Hierarchical Overlapping Coordination / 70 3.3 Hhm / 73 3.4 Hhm and the Theory of Scenario Structuring / 76 3.5 Adaptive Multiplayer Hhm Game / 79 3.6 Water Resources System / 80 3.7 Sustainable Development / 83 3.8 Hhm in a System Acquisition Project / 86 3.9 Software Acquisition / 90 3.10 Hardening the Water Supply Infrastructure / 94 3.11 Risk Assessment and Management for Support of Operations other than War / 98 3.12 Automated Highway System / 103 3.13 Food?]Poisoning Scenarios / 108 References / 113 4 Modeling and Decision Analysis 115 4.1 Introduction / 115 4.2 Decision Rules Under Uncertainty / 116 4.3 Decision Trees / 118 4.4 Decision Matrix / 122 4.5 The Fractile Method / 124 4.6 Triangular Distribution / 127 4.7 Influence Diagrams / 128 4.8 Population Dynamic Models / 132 4.9 PSM / 139 4.10 Example Problems / 144 References / 152 5 Multiobjective Trade?]off Analysis 155 5.1 Introduction / 155 5.2 Examples of Multiple Environmental Objectives / 157 5.3 The Surrogate Worth Trade?]off Method / 159 5.4 Characterizing a Proper Noninferior Solution / 166 5.5 The Swt Method and the Utility Function Approach / 168 5.6 Example Problems / 172 5.7 Summary / 177 References / 178 6 Defining Uncertainty and Sensitivity Analysis 179 6.1 Introduction / 179 6.2 Sensitivity, Responsivity, Stability, and Irreversibility / 180 6.3 Uncertainties Due to Errors in Modeling / 182 6.4 Characterization of Modeling Errors / 183 6.5 Uncertainty Taxonomy / 185 6.6 The Usim / 196 6.7 Formulation of the Multiobjective Optimization Problem / 199 6.8 A Robust Algorithm of the Usim / 204 6.9 Integration of the Usim with Parameter Optimization at the Design Stage / 207 6.10 Conclusions / 209 References / 209 7 Risk Filtering, Ranking, and Management 211 7.1 Introduction / 211 7.2 Past Efforts in Risk Filtering and Ranking / 212 7.3 Rfrm: A Methodological Framework / 213 7.4 Case Study: An Ootw / 220 7.5 Summary / 224 References / 224 Part II. Advances in Risk Modeling, Assessment, and Management 227 8 Risk of Extreme Events and the Fallacy of the Expected Value 229 8.1 Introduction / 229 8.2 Risk of Extreme Events / 230 8.3 The Fallacy of the Expected Value / 232 8.4 The Pmrm / 233 8.5 General Formulation of the Pmrm / 236 8.6 Summary of the Pmrm / 238 8.7 Illustrative Example / 239 8.8 Analysis of Dam Failure and Extreme Flood through the Pmrm / 240 8.9 Example Problems / 243 8.10 Summary / 257 References / 257 9 Multiobjective Decision?]tree Analysis 259 9.1 Introduction / 259 9.2 Methodological Approach / 261 9.3 Differences between Sodt and Modt / 279 9.4 Summary / 281 9.5 Example Problems / 282 References / 293 10 Multiobjective Risk Impact Analysis Method 295 10.1 Introduction / 295 10.2 Impact Analysis / 296 10.3 The Multiobjective, Multistage Impact Analysis Method: An Overview / 297 10.4 Combining the Pmrm and the Mmiam / 298 10.5 Relating Multiobjective Decision Trees to the Mriam / 304 10.6 Example Problems / 313 10.7 Epilogue / 325 References / 326 11 Statistics of Extremes: Extension of the PMRM 329 11.1 A Review of the Partitioned Multiobjective Risk Method / 329 11.2 Statistics of Extremes / 333 11.3 Incorporating the Statistics of Extremes into the Pmrm / 338 11.4 Sensitivity Analysis of the Approximation of f4(·) / 344 11.5 Generalized Quantification of Risk of Extreme Events / 350 11.6 Summary / 356 11.7 Example Problems / 357 References / 368 12 Systems?]Based Guiding Principles for Risk Modeling, Planning, Assessment, Management, and Communication 371 12.1 Introduction / 371 12.2 The Journey: The Guiding Principles in the Broader Context of the Emerging Next Generation Developed by the Federal Aviation Administration / 372 References / 387 13 Fault Trees 389 13.1 Introduction / 389 13.2 Basic Fault-Tree Analysis / 391 13.3 Reliability and Fault-Tree Analysis / 392 13.4 Minimal Cut Sets / 397 13.5 The DARE Using Fault Trees / 400 13.6 Extreme Events in Fault Tree Analysis / 403 13.7 An Example Problem Based on a Case Study / 405 13.8 Failure Mode and Effects Analysis and Failure Mode, Effects, and Criticality Analysis / 409 13.9 Event Trees / 411 13.10 Example Problems / 414 References / 420 14 Multiobjective Statistical Method 423 14.1 Introduction / 423 14.2 Mathematical Formulation of the Interior Drainage Problem / 424 14.3 Formulation of the Optimization Problem / 424 14.4 The Msm: Step-by-Step / 425 14.5 The Swt Method / 427 14.6 Multiple Objectives / 428 14.7 Applying the Msm / 429 14.8 Example Problems / 432 References / 438 15 Principles and Guidelines for Project Risk Management 439 15.1 Introduction / 439 15.2 Definitions and Principles of Project Risk Management / 440 15.3 Project Risk Management Methods / 443 15.4 Aircraft Development Example / 450 15.5 Quantitative Risk Assessment and Management of Software Acquisition / 454 15.6 Critical Factors That Affect Software Nontechnical Risk / 458 15.7 Basis for Variances in Cost Estimation / 460 15.8 Discrete Dynamic Modeling / 461 15.9 Summary / 469 References / 469 16 Modeling Complex Systems of Systems with Phantom System Models 473 16.1 Introduction / 473 16.2 What Have We Learned from Other Contributors? / 474 16.3 The Centrality of the States of the System in Modeling and in Risk Analysis / 476 16.4 The Centrality of Time in Modeling Multidimensional Risk, Uncertainty, and Benefits / 477 16.5 Extension of Hhm to Psm / 478 16.6 Psm and Meta-modeling / 480 16.7 Psm Laboratory / 486 16.8 Summary / 488 References / 489 17 Adaptive Two?]Player Hierarchical Holographic Modeling Game for Counterterrorism Intelligence Analysis 493 17.1 Introduction / 493 17.2 Bayes' Theorem / 494 17.3 Modeling the Multiple Perspectives of Complex Systems / 495 17.4 Adaptive Two?]Player Hhm Game: Terrorist Networks versus Homeland Protection / 499 17.5 The Building Blocks of Mathematical Models and the Centrality of State Variables in Intelligence Analysis / 502 17.6 Hierarchical Adaptive Two?]Player Hhm Game / 504 17.7 Collaborative Computing Support for Adaptive Two?]Player Hhm Games / 505 17.8 Summary / 507 References / 508 18 Inoperability Input-Output Model and Its Derivatives for Interdependent Infrastructure Sectors 511 18.1 Overview / 511 18.2 Background: The Original Leontief Input-Output Model / 512 18.3 Inoperability Input-Output Model / 513 18.4 Regimes of Recovery / 516 18.5 Supporting Databases for Iim Analysis / 517 18.6 National and Regional Databases for Iim Analysis / 518 18.7 Rims Ii / 522 18.8 Development of the Iim and its Extensions / 523 18.9 The Dynamic Iim / 527 18.10 Practical Uses of the Iim / 530 18.11 Uncertainty Iim / 533 18.12 Example Problems / 536 18.13 Summary / 539 References / 540 19 Case Studies 543 19.1 A Risk?]Based Input-Output Methodology for Measuring the Effects of the August 2003 Northeast Blackout / 543 19.2 Systemic Valuation of Strategic Preparedness Through Applying the Iim with Lessons Learned from Hurricane Katrina / 558 19.3 Ex Post Analysis Using the Iim of the September 11, 2001, Attack on the United States / 569 19.4 Risk Modeling, Assessment, and Management of Lahar Flow Threat / 575 19.5 The Statistics of Extreme Events and 6?]Sigma Capability / 587 19.6 Sequential Pareto?]Optimal Decisions Made During Emergent Complex Systems of Systems: An Application to the Faa Nextgen / 593 References / 612 Appendix: Optimization Techniques 617 A.1 Introduction to Modeling and Optimization / 617 A.2 Bayesian Analysis and the Prediction of Chemical Carcinogenicity / 655 A.3 The Farmer's Dilemma: Linear Model and Duality / 657 A.4 Standard Normal Probability Table / 664 References / 665 Author Index 667 Subject Index 673