Improving Risk Management with Modeling Time Element

Peng Zhou and Hareton K.N. Leung


risk management, time element, risk mitigation, risk metrics, mitigation performance


In traditional risk management, the time element is seldom explicitly modeled or considered by researchers and practitioners. In this paper we introduce the time element into risk management. We identified 8 different cases of risk and classified them into 3 groups. Based on these cases we proposed some useful practices for risk management. After that we created the status change diagram of risk and grouped possible status change paths into 3 patterns. With the new time element and status change pattern, we proposed 9 groups of metrics for risk monitoring and control and measuring the performance of risk mitigation. The proposed metrics can help practitioners better understand risk management and more efficiently and effectively perform risk management.

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