^aIsrael Institute of Technology, Haifa, Israel

Correspondence: Joseph Z. Ben-Asher, Technion, Israel Institute of Technology, Haifa, Israel 32000, Israel. E-mail: yossi@aerodyne.technion.ac.il

Abstract

Risk management is an indispensable process in the development of a new system. This process typically involves five major steps: planning, identification, assessment, analysis and handling. Risk assessment introduces quantitative and qualitative measures to assess and prioritize the program risks. Risk assessment based on Utility Theory is proposed. The main idea of this approach is to quantify the risk consequences by using a loss function derived from an equivalent lottery where the probability of getting the worst possible risk outcome is taken as the value representing the risk consequences. The prioritization of the risks is then based on their expected loss. The method is compared with other existing methods and is demonstrated by a representative case study of a complex defense system designed for intercepting ballistic missiles during their boost phase.