The Use of Influence Diagrams in Risk Management Involving Multiple Stakeholdersby Y. Hong, Univ of California, Los Angeles, United States,
G. E. Apostolakis, Univ of California, Los Angeles, United States,
Abstract: In this paper, a new methodology is proposed that employs influence diagrams to integrate the issues that arise in risk management and to demonstrate the relationship amoung the stakeholders and their objectives. A case study of a contaminated site cleanup is used as an example to help explain this approach. Since there are two stakeholders involved in the case study, two beginning decision nodes, one for each stakeholder, are used in developing the influence diagrams. Each stakeholder has his own influence diagram. Because there is more than one influence diagram, it is impossible to obtain an optimal decision from either one of them without the other. The result of the influence diagram evaluation is a bimatrix of alternative pair values. Game theory utilizes this bimatrix to search for an optimal decision. The bimatrix is the imput information to game theory and the final result is an optimal decision pair that provides a decision acceptable by both stakeholders.
Subject Headings: Risk management | Case studies | Management methods | Game theory | Pollution | Information management
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