Building A New Science: The Elements Of Risk And Decision Analysis

Risk is an issue in most activities, technical as well as economic, internal or external to any organization. It has been considered so far in the context of different disciplines. In engineering it is closely related to reliability theory, to quality control, to lean processes and more recently to the treatment of uncertainties in the supply chain. One summarizes all these aspects with the label "operational risk." Financial risk applies the core of financial activities performed by financial institutions such as banks or investment funds and realized within the framework of financial markets. A considerable amount of progress has been achieved in mathematical finance and financial engineering to design new tools to protect investments against risks by hedging techniques and portfolio methodology.