An Overview of Risk Analysis Methodology

Historically the term Risk Analysis evolved from capital investment studies. However risk is inherent in product development, reliability and safety in addition to cost effectiveness analysis. Often classical probability distributions expressing risk are unavailable; and thus it becomes imperative to assess the personal probability distributions of technical experts. Features of three main assessment methodologies and their applicability for quantifying technological risk are discussed. Implementation procedures and the pitfalls to be avoided are outlined. Sample results of a case study for new product development, which were subsequently used as inputs to a decision and control model are presented.