Published One Chapter in a Book

Risk Management: A Novel Six Sigma DMAIC Methods

Publication Details

Book ISBN: 9781634854177

Chapter 1 in the book “Risk Management: Past, Present and Future Directions” by Darnell Bowers (Editor)

Chapter Author: Vojo Bubevski

Published on: Oct 27, 2016

Publishing house: Nova Publishers www.novapublishers.com 

Chapter Description

Abstract:

Risk can be defined as the effect of uncertainty on objectives. It can originate from various sources. For example, uncertainty and threats from project failures in any phase; from failures in corporate business across industries; etc. Substantial risk can also be created by accidents, natural causes and disasters, as well as deliberate attacks from an adversary or events of an uncertain or unpredictable cause. In general, risk management is a process of identification, assessment, and prioritisation of risk followed by the coordination of actions and deployment of resources to minimise, monitor, and control the probability and impact of undesired events. The objective of risk management is to ensure that uncertainty does not affect the achievement of business goals. Most industries today recognise Six Sigma as a standard means to accomplish process and quality improvements in order to meet customer requirements and achieve higher customer satisfaction. One of the principal Six Sigma methodologies is DMAIC (Define, Measure, Analyse, Improve, and Control). In addition to stochastic optimisation, Monte Carlo simulation and sensitivity analysis, the presented method applies Six Sigma DMAIC, which is a new concept in risk management. Complementary to conventional methodologies, this method stochastically measures the risk management process, identifies the root-causes of variability and risk, stochastically measures and evaluates the risk factors, determines and applies improvements to mitigate the risk, and institutes continuous monitoring and correction to control and mitigate the risk in the future. In synergy with conventional risk management, the Six Sigma DMAIC method is an enhancement to contemporary risk management, thus offering important improvements. Six Sigma DMAIC is generic and has been proven in practice as being applied and published by the author for managing software quality risk and investment portfolio risk.

Keywords

Risk Management; Six Sigma DMAIC; Stochastic Optimisation; Monte Carlo Simulation; Sensitivity Analysis