Transformers

14

Economics in Transformer Management: Focus on Life Cycle Cost, Design Review, and the Use of Simple Bayesian Decision Methods to Manage Risk

Kjetil Ryen

CONTENTS

14.1    Introduction

14.2    Risk and Risk Aversion

14.3    Risk Reduction by LCC Focus and Design Review

14.4    Simple Bayesian Decision Methods

14.5    Which Probability Rate to Use

References

14.1  Introduction

General strategies for dealing with risk include the following [1]:

•  Investing for flexibility so that the changes can be made easily and inexpensively

•  Investing in projects that are robust, that is, those that can perform across a variety of future possibilities

•  Hedging against uncertainty

•  Ignoring risk

The increased focus on profit in the short term often ...