Journal of Operational Risk

Introducing a novel system-of-systems axiomatic risk management technique for production systems

Asif Mahmood

  • With the novel SoSARM technique, the complex systemic risks at SoS and lower levels can be rectified with an all-encompassing view across the organization.
  • It is a robust and flexible quantitative approach that can manage hierarchical and cross domain operational risks through probabilistic causal relations.
  • The whole risk appraisal process is carried out advancing top-down while the implementation is accomplished taking on bottom-up approach.
  • The salient features of this method include: improved information sharing, alignment of purposes, enhanced coordination, openness of systems, visibility of actions, integration and optimum allocation of resources.

We present a novel approach for managing the risks of a large complex sys- tem of systems. The methodology of system-of-systems axiomatic risk management (SoSARM) put forward here is an axiomatic-risk-based decomposition for resolving hierarchical coupled risks. The first part of the paper develops a new methodological concept to understand and quantify the relationships between higher-level and lower-level risks along with the contextual countermeasures adopted for each individual risk. In the second part of the paper, the theory and concepts developed demonstrate a typical production system of systems following a step-by-step hierarchical approach. We find the SoSARM technique to be a very simple yet comprehensive method of handling interdependent cross-domain risks.

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