Sunday, July 3, 2011

Qualitative risk factors

The Los Alamos National Laboratory is one of the U.S. Gov's national institutions that grew out of World War II, focusing today on a variety of strategic threats to global stability through science: nuclear, biological, and environmental, to name the big three.

So, it should come as no surprise that LANL has done a lot of thinking about risk management. I ran across one of their publications on qualitative risk management: "Risk Factor Analysis—
A New Qualitative Risk Management Tool", and was intrigued by the title, thinking: something new under the sun?  [No pun, but LANL is located in the US southwest desert]

Actually, RFA as they call it, is perhaps a new label on a fairly standard idea: putting numerical values on qualitative evaluations--better known as utility.  And then using the numerical values to do arithmetic, the results of which leading toward priority separations among.

I take some umbrage with the scientific minds behind this tool: substituting one label for another--eg "1" instead of 'L' (for low)--does not thereby enable arithmetic on the new labels just because they are numbers.  But don't take my word for it: consult the authority, Dr. Edmund Conrow who wrote the classic text that addresses this very issue:  "Effective Risk Management: Some keys to success" [and, also a bit of trivia, Conrow also wrote the risk chapter for number one all time "Project Management: A Systems Approach to Planning, Scheduling, and Controlling",  by Harold Kerzner]

Nevertheless, in their publication they have a very neat diagram, not altogether unique, but certainly compact, of a view of qualitative risk management.  Note the inclusion of 'budget'.  Nothing from the government would be complete without it.

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