Organizations take many actions are taken to reduce risk. However, not all risks can be avoided. To effectively manage risk, managers and regulators must evaluate and compare risks associated with different threats. Yet, it is frequently difficult to obtain reasonable assessments of these risks. Traditional approaches often produce unsatisfactory results when the probability of failure is low but the costs of failure are high. Attempts to use a single dimension to evaluate threats often lead to unreliable and contentious assessments. Many risk assessment heuristics and displays can yield misleading and sometimes mathematically incongruous assessments. Furthermore, increases in costs caused by people’s reactions to failures are often ignored or grossly underestimated. The Tool for Risk Identification, Assessment, and Display (TRIAD) is designed to address these problems.
To effectively manage risk, one must be able to evaluate the risks associated with different threats and compare them. But it is frequently difficult to obtain precise assessments. So, managers often rely on informal “seat-of-the-pants” risk assessment procedures. These are often inaccurate and subject to a variety of common group and individual decision biases. Occasionally, formal probabilistic risk assessment (PRA) methods are used. However, these methods are complex, costly in time and resources, and highly dependent on having precise estimates of the probabilities associated with the various threats and the costs of the potential damages that could accrue. In some cases, this assessment can be accomplished simply and the obtained result matches our intuitions. However, in many cases (e.g., when evaluating the risks associated with a new endeavor) this is impossible. TRIAD charts a “middle way” designed to guide the risk assessment process towards more accurate and reliable assessments than can be achieved by informal methods without the costs and problems associated with PRA. To accurately assess the risk associated with a potential failure or other threat, one must consider the possible outcomes that could occur, the likelihood of each outcome, and the consequences that may be associated with each outcome.
Assessing the risk associated with a possible failure or other event becomes more difficult when: 1) the event of interest (e.g., a failure) can have many possible outcomes, 2) the event under consideration is not repeatable or there is no data from which to directly estimate the probability of the event, 3) the event could lead to different types of damage that cannot be easily measured on a common scale and 4) the cost of the potential damage or the likelihood of the event is extreme. TRIAD addresses all of these issues.