Risk Analysis and Management

Risk is an expression of the potential harm or loss associated with an activity executed in an uncertain environment. This chapter presents a simple example of a risk analysis of a Pinewood Derby. Then it presents a longer example of assessing the risk of incorporating photovoltaic solar panels into an existing electric power grid. Throughout, it shows common mistakes that are often made while doing risk analyses, such as using unequal ranges for the frequency of occurrence and the severity of consequences.

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