Quantitative Risk – Phases 1 & 2
Systems Engineering and Systems Management Transformation
Report Number: SERC-2013-TR-040-3
Publication Date: 2013-11-12
Project: A Complexity-Based Approach To Quantitative Technical Risk
Dr. Roshanak Nilchiani
This report documents the findings and results of Phases 1 and 2 of RT40, Quantitative Technical Risk. The Quantitative Technical Risk project is envisioned as a multi-year effort to develop and transition effective methods, procedures and tools (MPT) to improve the effectiveness of risk management in DoD system development programs. Phase 1 emphasized foundational research for a framework and approach to examine representations of the evolving system design to locate sources of complexity and quantify system complexity in order to provide insight into development and performance risk.
Phase 1 ran from November 2012 through August 2013, and is documented in Volume I of this report. The project adjusted emphasis between Phase 1 and Phase 2. The motivation for the change in emphasis were the observations that (a) risk assessment based on analysis system complexity required a level of design detail that is not available until too late in the acquisition lifecycle to inform the system acquisition system decision making, and (b) system complexity may be only one of many sources of risk. This change in focus was accompanied by a change in strategy from foundational research to one of incremental development, testing and transition to end-users of relevant and practical near-term MPT that would become the core of a broader toolset.
Phase 2 emphasized developing a framework to expand the traditional DoD characterization of risk, and an approach that integrated risk management with the sequence and structure of program decisions at different stages of acquisition and program components. Risks, in the traditional DoD characterization are specific future events that have some probability and consequence that can be estimated in advance. The expanded characterization, modeled after risk analysis in other domains, profile the risk propensity and risk exposure of the program as measured by a set of risk indicators. Decision making is informed by assessing the impact alternative decision choices on the risk profile. Warning thresholds on the risk indicators alert program management for the need to consider risk mitigation. Characteristic program risks, indicators, and potential mitigations are linked in a Risk Breakdown Structure (RBS). The RBS is generated by applying Process Failure Modes and Effects Analysis (P-FMEA) to the program decision breakdown structure. Phase 2 ran from September 2013 to 12 November 2013, and is documented in Volume II of this report.
The following phases will incrementally develop, pilot test, refine, enhance and transition specific MPT,
in collaboration with end-user co-developer transition partners.