Selection of risk response actions considering risk dependency

Yao Zhang (Department of Operations and Logistics Management, Northeastern University, Shenyang, China)
Fei Zuo (Department of Operations and Logistics Management, Northeastern University, Shenyang, China)

Kybernetes

ISSN: 0368-492X

Publication date: 7 November 2016

Abstract

Purpose

The purpose of this paper is to propose a method to address the problem of selecting risk response actions (RRAs) considering the risk dependency that is seldom considered in the existing studies.

Design/methodology/approach

First, a method based on the Measuring Attractiveness by a Categorical-Based Evaluation Technique (MACBETH) is proposed to measure the dependencies between the risks, and then a preference coefficient denoting the relative importance of the risk dependency is introduced. Besides, an exponential utility function is used to describe the project manager’s (PM) risk-averse behaviour. Finally, a mathematical model that incorporates the risk dependency and risk preference of the PM is constructed for selecting the RRAs.

Findings

Risk dependency plays an important role in the process of RRA selection. First, more expected utility can be obtained when the risk dependency is considered. Second, more attention should be paid to the risk dependency for coping with critical risks when the budget is tight.

Practical implications

This method can be applied to determine the RRAs when the risk dependency exists between the project risks.

Originality/value

This paper proposes a model to select RRAs with consideration of the risk dependency, which is an important issue from a theoretical as well as a practical perspective in project risk management.

Keywords

Citation

Yao Zhang and Fei Zuo (2016) "Selection of risk response actions considering risk dependency", Kybernetes, Vol. 45 No. 10, pp. 1652-1667

Download as .RIS

DOI

: https://doi.org/10.1108/K-05-2016-0096

Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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