It has been suggested that this article be merged into Risk management. Risk analysis can be defined in many different ways, and much of the risk analysis techniques pdf depends on how risk analysis relates to other concepts. Risk analysis can be “broadly defined to include risk assessment, risk characterization, risk communication, risk management, and policy relating to risk, in the context of risks of concern to individuals, to public- and private-sector organizations, and to society at a local, regional, national, or global level.
Some books take a slightly different approach and define risk management as the overarching concept, where risk analysis is the component that seeks to identify and measure the risks and risk mitigation is determining what to do about the risks. Risk analysis can be qualitative or quantitative. The analysis often seeks to describe the consequences in numerical units such as dollars, time, or lives lost. How likely is it that it will happen?
If it does happen, what are the consequences? 1,2,,N where si is scenario i, pi is the probability of scenario i, ci are the consequences if scenario i occurs, and N is the total number of scenarios. This type of analysis typically results in a probability distribution over the consequences. Although actuarial science has used probabilities to measure risk for more than a hundred years, PRA as a specific mode of inquiry was initially developed to analyze engineering risks such as nuclear power plants and the space shuttle.
More recently, it has also been applied to other areas, such as business, climate change, health risks, food safety and security. Especially with the increasing importance of terrorism, game theory has become a quantitative tool to analyze the risks of intelligent adversaries who seek to do harm against a system or people. These game-theoretic techniques may be probabilistic or deterministic. Qualitative risk assessment, in absence of precise values for likelihood and consequences, assigns relative and broad classifications to the likelihood and consequences for each risk and does not build a precise mathematical model of risk as suggested by PRA.