Risk Intelligence Metrics: An Adaptive Metrics Center Industry Report

By

Joseph M. Firestone, Ph.D.

Published By:

KMCI Online Press,

Alexandria, VA, 2006    

2006 Executive Information Systems, Inc.

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By Major Credit Card..

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Sale is final upon access to .pdf Report, and accompanying files in the Report Bundle (See license agreement for specific statement).

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Contents of the Report Bundle

(a)    A Report (134 pages) entitled Risk Intelligence Metrics: An  Adaptive Metrics Center Industry Report;

(b)    A model implemented using Expert Choice software, for measuring relative risk intelligence of competing organizations entering a new area of business activity;

(c)     A model implemented using Expert Choice software, for measuring relative risk intelligence of competing knowledge workers in solving problems and reducing the risk of error in a particular problem area;

(d)    A model implemented using Expert Choice software, for measuring relative risk intelligence of competing job candidates in solving problems and reducing the risk of error in job-related situations;

(e)    A model implemented using Expert Choice software, for measuring relative risk intelligence of competing teams in solving problems in a particular problem area;

(f)      A model implemented using Expert Choice software, for measuring relative risk intelligence of competing Communities of Practice (CoPs) in solving problems in a particular problem area

(g)    A model implemented using Expert Choice software, for measuring Quarterly Corporate Performance using a revised balanced scorecard framework;

(h)    Information allowing The RI Metrics Report Licensees to download a 30-day Expert Choice Trial License to evaluate the software and work with the models provided in The RI Metrics Report

For Whom?

Overview of Report

KMCI Online Press, the Adaptive Metrics Center, and Executive Information Systems, Inc.  are proud to release Risk Intelligence Metrics: An Adaptive Metrics Center Industry Report. Here is an overview of the report.

Risk is something we live with everyday. It is part of our being alive. Every living thing has expectations. And when it acts on those expectations, it risks error, because nothing living is infallible. Any one of our expectations may be wrong at any time. None of us is so wise, or so favored, or so skilled, or so wealthy, or so lucky, that we can avoid error and the risk of it.  

The survivors of the great Asian Tsunami of 2004 know that even an infinitesimal risk, the risk of merely being in the affected areas, can be made manifest in unimagined reality. The families of those who died in the 9/11 attack have the same kind of knowledge of risk made manifest. Who among them, that fine sunny morning, had even an inkling of the risk their loved ones were taking, merely by going to work in the towering global center of commerce that was the World Trade Center? The top executives of Enron, Tyco, Worldcom, Lucent, Microstrategy, and Arthur Andersen realized to their lasting regret, that they risked, and suffered, consequences they never imagined were a real possibility at the time they made the various decisions that destroyed or severely damaged their companies. The "Neo-Cons", both in the Bush administration and outside it, urged the US intervention in Iraq, and provided estimates of its likely costs initially ranging from zero to $1.7 Billion in testimony to Congress. At this writing, costs are $300 Billion, and there is no end in sight for either these, Iraqi or Alliance casualties, or the growth of anti-Americanism and terrorist recruitment in the Muslim world partly resulting from the intervention.  

Recent history is all about people taking risks they did not know they were taking, and losing out, indeed losing big. In business, risk assessment and risk management are more important than they have ever been. The Sarbanes-Oxley Act has focused the anxiety about risk into a concern for compliance with Government regulations. But beyond this concern with SOX compliance, there's also a renewed concern, after the "go-go" days of the late '90s, about managing risk to avoid the fate of the Enrons and Andersens.  

In business, all eyes are focused on risk. The purpose of this report is to present some new instruments and models for measuring risk intelligence. 'Risk Intelligence' is an ambiguous term. In many quarters, the term means a particular kind of business intelligence. And business intelligence, in turn, according to some, refers to a kind of information situated on a continuum of increasing value ranging from data, to information, to intelligence, to knowledge, and finally to wisdom. Sometimes the term 'actionable intelligence' is used to describe information that is good enough to act upon, even if it has not yet reached the level of quality we see in knowledge. In this context, actionable risk intelligence is information about the risks we face that is good enough to act upon. 

This report is not about risk intelligence in the sense of information that is higher quality than ordinary information, but of lesser quality than knowledge. It is about 'intelligence' in the sense of ability to learn and solve problems. More precisely, it is about tests and metrics measuring the relative ability to solve problems and reduce the risk of error in one's decision model solutions. 

Five such tests and related metrics will be described in this report: 

 In addition, the main body of the report ends with Chapter 5 which considers alternative risk intelligence tests and explains how to develop additional ones. 

The report also contains a number of appendices: 

 

Table of Contents

 

Abstract                                                                                                                            x 

Introduction                                                                                                                    xi 

Chapter 1: Test for measuring Relative Risk                                                            1            

Intelligence of competing organizations entering a new

area of activity

 

The application context for organizations                                                                        1              

The test                                                                                                                            2

Test factors                                                                                                                      2

Measurement model                                                                                                        4

Pair comparison ratings of organizations and factors                                                     6

Illustration                                                                                                                        11  

 

Chapter 2: Test for measuring Relative Risk                                                          16

Intelligence of competing knowledge workers in solving

problems and reducing the risk of error in a particular

problem area

 

The application context for organizations                                                                      16 

The test                                                                                                                          16

Test factors                                                                                                                    16

Measurement model                                                                                                      17

Ratings of knowledge workers and factors                                                                   19

Illustration                                                                                                                       19

 

Chapter 3: Test for measuring Relative Risk                                                         22

Intelligence of competing job candidates in solving

problems and reducing the risk of error in job-related

situations

 

The application context for organizations                                                                     22 

The test                                                                                                                         22

Test factors                                                                                                                   22

Measurement model                                                                                                     23

Ratings of job candidates and factors                                                                          23

Illustration                                                                                                                      23

 

Chapter 4: Test for measuring Relative Risk                                                        25

Intelligence of competing teams and communities of

in solving problems in a particular area

 

The application context for organizations                                                                     25 

The tests                                                                                                                       25

Test factors                                                                                                                   25

Measurement model and pair comparison ratings                                                      25

of competing teams, CoPs, and factors                                                         

Illustration                                                                                                                     26

 

Chapter 5: How to develop alternative Relative Risk                                         28

Intelligence Tests by varying key elements of the

Models

 

Variations in conceptual frameworks and underlying theories                                  28

Variations in risk domains                                                                                         29

Variations in structuring the test factors                                                                   29

Variations in test factors and scaling assumptions                                                  31

Conclusion                                                                                                                33

 

Appendix 1: The Analytic Hierarchy Process and Expert                               35

Choice

 

The Analytic Hierarchy Process (AHP) framework and                                         35

decision alternatives

Decomposition                                                                                                         36

Comparative judgments and priority ratings                                                           38

Comparative judgments                                                                                          39

Deriving scale values                                                                                              42

Illustration comparing Quarterly Corporate Performance                                      47

Using the revised balanced scorecard model

Synthesizing priorities and computing Overall Corporate                                      50

Performance

Method                                                                                                                     51

Comparing Quarterly Corporate Performance                                                       52

Expert Choice and its AHP capabilities                                                                 53

Decomposition                                                                                                       53

Arriving at comparative judgments and local priority values                                 56

Synthesizing local priorities to arrive at global and overall priorities                     57

Other EC capabilities                                                                                            57

Conclusion                                                                                                           59

 

Appendix 2: Prioritizing Risk Areas                                                               59

 

Appendix 3: Conceptual background                                                           63

 Chapter A-3-1: What risk is and how you reduce it                                          63

Chapter A-3-2: What knowledge is                                                                    71

Chapter A-3-3: Seeking, recognizing, and formulating                                      82

solutions

Chapter A-3-4: Making new solutions                                                                86

Chapter A-3-5: Killing your worst ideas                                                             94                          

 

Appendix 4: References and bibliographical essay                               106

References                                                                                                      106

Bibliographical essay                                                                                       108                         

 

Appendix 5: Acknowledgments                                                                  113


Pricing   for Risk Intelligence Metrics Bundle

Further Distribution

Payment

By Major Credit Card..

Terms

Acceptance of license agreement.
Sale is final upon access to .pdf Report, and accompanying files in the Report Bundle (See license agreement for specific statement).

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Purchase the Report Bundle 

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