2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Risk Acceptance And Society at Large Tim Howard Society & Aerospace Technology TC Topic 1

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Overview Historical Perspective of Risk Societys Response to Risk Society, Risk and Aerospace Aerospace, Risk and Society Against the Gods; The Remarkable Story of Risk by Peter L. Bernstein

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Risk The word risk derives from the early Italian risicare, which means to dare. (Bernstein)

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development A Historical Perspective of Risk Before 1200s - Gambling, Arabic numbers & Fibonacci (1, 2, 3, 5, 8) The Renaissance –1500s – Cardano, gambling & probability –1600s – Pascal & Fermat – Probability; Graunt & statistical sampling – London population tables 1700s –Daniel Bernoulli: information quality & utility value –De Moivre – normal distribution & standard deviation (The Bell Curve) –Insurance & the coffee houses – Lloyds 1875 – Galton & Regression to the Mean (sweetpeas) 1900s –The Rationality Debate –Uncertainty & failure of invariance – same problem presented differently results in different choices

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Societys Response to Risk Until 1960s, prevailing idea is that individuals are naturally risk averse 1960s - Loss aversion more powerful motivation than risk aversion – we hate to lose, and will take the gamble to avoid a sure loss –Aerospace losses often more catastrophic, and more sensational than other technology or system losses Risk tolerance increases in relation to our attitudes about the future Issue presentation key to the acceptance or rejection of risk and hence loss Need to identify societys level of acceptable loss Version A: $30 to start; Choices are coin flip with heads = wins $9, tails = lose $9; no flip = keep the $30 Possible outcomes are $21, $30, $39 70% choose to flip coin Version B: $0 to start; Choices are coin flip with heads = wins $39, tails = wins $21; no flip = given $30 Possible outcomes are $21, $30, $39 43% choose to flip coin

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Societys Response to Risk Society needs risk to grow; historical outlets are exploration and commerce –Exploration & development of old frontiers driven by commercial needs for new markets The Phoenicians, Columbus, The British Empire 10,000 years of maritime technologies enabled exploration and commerce <500 years of risk management to improve probability of success Insurance, economic forecasting, investment strategies

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Society, Risk and Aerospace The first century of flight made us the new risk outlet for societal growth –Air travel, cargo movement, satellite systems and information transport fundamental to the success of the new global economy –We enable exploration and development Shackleton, Byrd, & the 19 th century frontier Space is the new frontier for human exploration & commercial development –100 years of aerospace technologies available to support the need to grow –New fields use risk management to improve probability of success (National defense, air traffic control, space launch) –We develop new technologies and new applications of existing technologies to provide social growth

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Aerospace, Risk and Society Our industry was founded by risk takers; now we operate in a risk- averse mode –Societal growth stunted, or turned inwards; not the natural process We need to place our mean to the right of where we are, and start regressing – we need to take more risks –Rejuvenate our industry –Rekindle interest in our profession –Reclaim technology leadership role society needs us to play IT can only give us a virtual frontier; we have already delivered the real thing We need to embrace our role as the new enabler of societal growth –Its time for a fresh deck of cards…

2/13/ Engineering & Technology Management Group Engineering Technology Management Tracking the Constant of Change Management History Society Legal Aspects LogisticsSupply Chain Systems Engineering Economics Risk Technical Information Multidiscipline Design Product Development Risk … if we dare