Unformatted text preview: stimates am needed. 4.6.3 Risk Analysis Techniques The tools and techniques of risk analysis rely
heavily on the concept and "laws" (actually, axioms and
theorems) of probability. The system engineer needs to
be familiar with these in order to appreciate the full
power and limitations of these techniques. The products
of risk analyses are generally quantitative probability
and consequence estimates for various outcomes, more
detailed understanding of the dominant risks, and
improved capability for allocating risk reduction
resources.
Decision Analysis. Decision analysis is one technique
to help the individual decision maker deal with a
complex
set
of
uncertainties.
Using
the
divideandconquer approach common to much of
systems engineering, a complex uncertainty is
decomposed into simpler ones, which are then treated
separately. The decomposition continues until it reaches
a level at which either hard information can be brought
to bear, or intuition can function effectively. The
decomposition can be graphically represented as a
decision tree. The branch points, called nodes, in a
decision tree represent either decision points or chance
events. Endpoints of the tree are the potential
outcomes. (See the sidebar on a decision tree example
for Mars exploration.)
In most applications of decision analysis, these
outcomes are generally assigned dollar values. From
the probabilities assigned at each chance node and the
dollar value of each outcome, the distribution of dollar
values (i.e., consequences) can be derived for each set
of decisions. Even large complex decision trees can be
represented in currently available decision analysis
software. This software can also calculate a variety of
risk measures.
In brief, decision analysis is a technique that
allows:
•
•
•
• A systematic enumeration of uncertainties and
encoding of their probabilities and outcomes
An explicit characterization of the decision
maker's attitude toward risk, expressed in terms
of his, her risk aversion
A calculation of the value of "perfect
information," thus setting a normative upper
bound on informationgathering expenditures
Sensitivity testing on probabili...
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This document was uploaded on 02/26/2014 for the course E 515 at University of Louisiana at Lafayette.
 Spring '13
 Mr.Kau
 Systems Engineering, The American, ... ...

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