Title: Managing rare and undetectable events in risk assessment: the case of a satellite system launch project
Authors: Cristiano Angeletti; Andrea Giacchero; Massimiliano M. Schiraldi
Addresses: Engineering and Innovation Division, Nuclear Technical Area, Enel S.p.A., Viale Regina Margherita, 125-00198, Roma, Italy ' Risk Management, Cassa Depositi e Prestiti S.p.A., Via Goito, 4-00185, Roma, Italy ' Department of Enterprise Engineering, Tor Vergata University of Rome, Operations Management Research Group, Via del Politecnico 1, 00133, Roma, Italy
Abstract: Assessing the wide diversity of risk types in large and complex projects using the traditional hyperbolic iso-risks curves may seem a simplistic and reductive approach, and evaluating the risk factor through the multiplication of likelihood and severity parameters results in defining as dangerous those risks that are associated either with rare but devastating consequences or with probable but minor effects. In this work, the authors aimed at focusing on those risks that, despite their low occurrence probability, may significantly compromise a project result. To this extent, a different formula has been used to compute the risk factor, keeping into account risk detectability and evaluating the potential consequences in four different domains (cost, time, performance, reputation). This approach has been validated on the case of a large industrial project related to the launch of an innovative mobile telecommunications system, collecting the experts' opinions in a primary Italian firm in aerospace industry.
Keywords: risk assessment; risk detectability; rare events; satellite communication systems; satellite launches; undetectable events; project management; project risk management; iso-risks curves; black swans; risk factor evaluation; financial risks; economic risks; technical risks; mobile telecommunications; mobile communications; Italy; aerospace industry.
International Journal of Project Organisation and Management, 2014 Vol.6 No.1/2, pp.107 - 120
Published online: 10 Mar 2014 *Full-text access for editors Access for subscribers Purchase this article Comment on this article