Development of a dynamic risk management model allowing for holistic assessment of identified risks and adoption of preferred mitigation strategies based on a multi criteria decision-scheme

Abstract

Current risk management practices are characterized by linear and rigid frameworks, not allowing for periodically assessments of identified risks. The aim of the developed Dynamic Risk Management Model (DRMM) is to allow to periodically assess identified risks from a holistic perspective and to adopt a preferred mitigation strategy using a multi criteria decision scheme. A set of improved assessment criteria is provided to arrange for a more comprehensive assessment of risks. Replacing the traditional Risk Priority Number (RPN) to decide what risks that are subjective to a mitigation, with a set of rules based on the rating of the assessed criteria. A flowchart is provided to form the basis of the risk management process, including 8 phases that should be followed. The flowchart also demonstrates the dynamic aspect of the proposed DRMM. A case study has been performed in a company project to test and validate the DRMM.