Severity of risks threatening a class of systems
by Panagiotis T. Artikis
International Journal of Applied Systemic Studies (IJASS), Vol. 5, No. 3, 2014

Abstract: Stochastic models are generally recognised as extremely powerful analytical tools for investigating fundamental concepts and operations of the risk management process. The present paper aims to consider stochastic modelling efforts related to effective reduction of the severity of risks causing multiple damages to a class of systems. A new stochastic model is formulated which is shown to be a classical problem of risk measurement operations. The investigation of such a model is based on classical methods of probability distributions theory. A stochastic model having the form of a random sum of non-negative random variables is formulated. Sufficient conditions for evaluating the characteristic function of the proposed random sum are established. Moreover, applications of this random sum in evaluating the severity of a risk threatening a class of systems are provided. The difficulty of establishing properties which extend the practical applicability of the proposed random sum still remains. The formulated stochastic model provides a new original way to measure catastrophic risks and overcome the existing classical risk measurement stochastic models.

Online publication date: Sat, 30-Aug-2014

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