Design for Reliability

Chapter 16

Risk Management, Exception Handling, and Change Management

Jack Dixon

Introduction To Risk

Risk has been defined, as the possibility of loss or injury. Risk is present in all human activities; there is risk in everything we do. There are many different types of risk that concern risk managers. A common thread among these risks should be the involvement of risk managers to assess the risks, to determine the future effects if the risks materialize, to develop contingency plans, and to select the best choice among alternatives to mitigate or eliminate the effects of the risks assessed.

Since risk measures a potential loss, it can be viewed as an economic loss. However, there are numerous ways to categorize risk. Some typical categories include:

Safety risk	Insurance risk
Health risk	Political risk
Environmental risk	Technological risk
Program risk	Portfolio risk
Security risk	Ecological risk
Financial risk

In this chapter we focus on two types of risk: program risk and design risk.

Qualitative Risk Analysis

Qualitative risk analysis is the most widely used type of risk analysis, largely because it is quickest and simplest to perform. This approach uses terms such as high, medium, and low to characterize the risk. These levels of risk are determined by the combination of likelihood of occurrence and severity of loss in relative terms described in words rather than numerics. This form of risk analysis does not use actual hard data in the risk assessment process ...