A Stochastic Dominance Approach to Risk Analysis of Computer Systems.

Author List: Post, Gerald V.; Diltz, J. David;
MIS Quarterly, 1986, Volume 10, Issue 4, Page 363-375.
Auditors and systems analysts are increasingly called upon to determine the impact of a disaster striking the computer system. Current risk analysis methods rely on some variation of expected value analysis. The expected value method suffers from serious drawbacks in this application because probabilities of disaster are difficult to estimate and the loss distributions are likely to be highly skewed. This article presents an improved methodology for dealing with EDP risk analysis and contingency planning. It is based on the concept of stochastic dominance and it provides a more accurate comparison of the various contingency plans by dealing with estimates of the entire loss distribution. This methodology also focuses on the differences between contingency plans, rather than on the cause of the disaster. The application of this methodology is illustrated for the case of a hypothetical medium-sized bank using aggregated data.
Keywords: Contingency planning; risk analysis; stochastic dominance
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#44 0.295 approach analysis application approaches new used paper methodology simulation traditional techniques systems process based using proposed method present provides various
#264 0.158 risk risks management associated managing financial appropriate losses expected future literature reduce loss approach alternative mitigate failures failure cause mitigation
#3 0.111 problems issues major involved legal future technological impact dealing efforts current lack challenges subsystem related highly present addressing likely recommendations
#261 0.095 software development maintenance case productivity application tools systems function tool engineering projects effort code developed applications analysis estimation methodology methods
#63 0.063 mis problems article systems management edp managers organizations ;br> data survey application examines need experiences recent organization reports departments oriented
#78 0.063 planning strategic process management plan operational implementation critical used tactical effectiveness number identified activities years effective developed issues empirical plans
#221 0.060 competence experience versus individual disaster employees form npd concept context construct effectively focus functionalities front-end knowledge-intensive stage explores set definition
#143 0.056 value business benefits technology based economic creation related intangible cocreation assessing financial improved key economics assess question created create understanding