A Case Study in Risk/Decision Analysis.

The increasing emphasis being placed on risk analysis in DOD has made the subject a focal point for program managers. The individual services are required to estimate or subjectively determine the risk inherent in their programs by conducting a risk assessment. The case study developed in this report is an attempt to inject a quantification of risk based on the facts available and the use of probability and statistics. A decision analysis is then applied to assist the decision maker in definitizing his options on a dollar basis. Various trade-offs and evaluation criteria are used to transfer the degree of risk to this dollar base. Each cost schedule, and performance parameter is treated on an equal risk basis. Author