ENGINEERING ECONOMICS AND TIME-VALUED RISK: TOWARDS MORE SUSTAINABLE RISK MANAGEMENT

摘要

The scope of this article is the combined use of engineering economics and survival analysis in estimating time-value of risk-related resources. The discussion includes (1) the need for sustainable risk management (2) the importance of time-valuation of risk-related resources in the allocation or selection among competing risk mitigation alternatives, (3) the convergence of deterministic engineering economics, survivability analysis, and probabilistic analysis, and (4) results and examples of application in the context of prevention of risk event or mitigation of its consequences.rnThe significance of this article is in how three topics: engineering economics, survivability analysis, and probability theory can be used in a novel way to address sustainability, which currently is emerging in the area of security risk management both for public and for-profit organizations. There is also significance in the proposed algorithm as a step towards cost-justifiable resource allocation decisions grounded on generally acceptable risk management framework by allowing visualization & comprehension of tradeoff between prevention & preparedness, and the use of temporal information, advances in data fusion and data mining. It may also serves as foundation for descriptive & prescriptive resource allocation in risk management, benefit-cost evaluation of risk related resources, and refinement of the concept of chance of a risky event.