A multi-criteria framework for the selection of risk analysis methods at energy utilities. (30th March 2005)

• Record Type: Journal Article
• Authors: Ojanen, Otso; Makkonen, Simo; Salo, Ahti
• Is Part Of: International journal of risk assessment and management. Volume 5:Number 1(2004)
• Page Start: 16
• Page End: 35
• Publication Date: 2005-03-30
• Subjects: risk management -- multi-criteria decision analysis -- energy markets -- risk analysis methods -- energy utilities -- decision making; Risk assessment -- Periodicals; Risk management -- Periodicals; 361.1
• Languages: English
• ISSNs: 1466-8297

Abstract

The ongoing deregulation and convergence of energy markets have made it imperative for energy utilities to adopt systematic risk management policies. Effective implementation of these policies calls for adequate risk information, which is typically synthesised by combining inputs from several risk analysis methods. Many utilities select such methods informally, based on subjective perceptions of how well these methods contribute to the objectives of their risk management strategy. In this paper, we address this selection problem through decision analysis; specifically we: develop a systematic multi-criteria framework for evaluating collections of risk analysis methods; and report a case study where such collections were evaluated with a novel decision support tool which accommodates incomplete preference information. Drawing upon this case study, we argue that the development of a systematic framework can contribute to an improved understanding of key issues in risk management and engender potential savings due to better decision-making.