1. P RINCIPLES OF R ISK A NALYSIS S AAD H AJ B AKRY, PhD, CEng, FIEE

2. M AIN P OINTS Saad Haj Bakry Principles of Risk Analysis Definition Analysis Framework Uncertainty Basic Steps Outcome Avoidanc e Case Study

3. R ISKS Saad Haj Bakry Principles of Risk Analysis Definition S YSTEMS: Errors / Failures (Internal / External; Accidental / Deliberate) P ROJECTS: Exploration (Investment / Natural Resources / …) S OURCES: Technology / Organization / People / Environment (Natural / Professional) Formulation : The probability of possible outcomes

4. R ISK A NALYSIS F RAMEWORK Saad Haj Bakry Principles of Risk Analysis Probability Distributions Input Variables Risk Models Mathematical Modeling Objective: Available Data Subjective: Estimations / Field Studies Simulate the risk considered Various frequency distributions Evaluations of risk Limited to what is considered Make / Break “ value of results ” Framework

5. G ATHERING D ATA: I NPUT Saad Haj Bakry Principles of Risk Analysis Discover how much information is “ unknown ” / how much is “known” Steps Next Step Gather “Available Data” on the problem considered Start

6. I SOLATING K EY V ARIABLES Saad Haj Bakry Principles of Risk Analysis Sensitive step for the reliability of the “Outcome” Next Step Use data to isolate “Key Variables”, including “Past Experience” Steps

7. Q UANTIFICATION OF K EY V ARIABLES Saad Haj Bakry Principles of Risk Analysis Avoid “over / under ” risking Next Step Quantify the isolated “Key Variables” considering both different “Good and Bad” outcomes “Objective” and “Subjective” variables Use “Statistical Distributions”: Use Triangular for uncertain variables Steps

8. U NCERTAINTY / R EALITY / O UTPUT Saad Haj Bakry Principles of Risk Analysis STOP Express uncertainty at the “Variable Level” not at the “Final Answer Level” Check the answer for “Reality” / Protect “Credibility” Express output in “Cumulative / Frequency Distribution” Steps

9. V IEWS OF U NCERTAINTY Saad Haj Bakry Principles of Risk Analysis Uncertainty PastForecast Uncertainty Variable Time

10. E XPRESSING O UTPUT Saad Haj Bakry Principles of Risk Analysis Output Possible Outcomes Cumulative Probability Distribution Probability Distribution

11. R ISKS A VOIDANCE: 1/3 Saad Haj Bakry Principles of Risk Analysis Avoidance “Reducing risk” using “protection measures” Creates “new factors” that should be considered in “risk analysis”. The “new factors” would change the “model” and the “outcome” of “risk analysis”.

12. R ISKS A VOIDANCE: 2/3 Saad Haj Bakry Principles of Risk Analysis Avoidance “Cost-effectiveness” of “protection measures” Cost of risk: No “protection measures” Cost of: “protection measures” Cost of risk: with “protection measures”

13. Cost of Protection Cost of Risk Balance R ISKS A VOIDANCE: 3/3 Saad Haj Bakry Principles of Risk Analysis Avoidance

14. C ASE S TUDY Saad Haj Bakry Principles of Risk Analysis “Choose” a “case study” Draw a “frame work” Gather Data: “input” Isolate / Quantify “key variables” Consider “uncertainty”, “reality”, and “credibility” (objective / subjective values) Express “output”: probability distributions Avoidance (protection measures, cost), “repeat” Suggested Work: Case Study

15. R EFERENCES Saad Haj Bakry Principles of Risk Analysis AuthorTitlePublication R.E. Megill Introduction to Risk Analysis Petroleum Publishing Company, Tulsa, Oklahoma, 1977 S.H. Bakry Development of security policies for private networks International Journal of Network Management, Vol. 13, 2003