Satellite Risk Analysis Literature Review

Risk management in the Government satellite community is a very vague term. Everyone wants to manage risk but no one seems to know a good way to accomplish it. The current method seems to be an eye catching stoplight table where one axis is likelihood of the risk occurring and the other is the level of consequence if it does occur. Then each risk is placed on this table based solely on the designer’s opinion, most likely considering the consequence of having negative risks in front of an evaluator rather than the actual risk. This process also prevents the designer from taking into consideration the cost or value of the risk. This article explores the methods used by NASA and the finance community as well as a few other methods, such as discounted cash flow and the birdshot and buckshot methods, for handling risk to determine their usefulness to the Government satellite community. It also briefly examines some methods for calculating opportunity cost instead of solely calculating risk. Through the thorough investigation into these methods of calculating opportunity cost and performing risk assessment this research determined that when applied to Government satellite systems the methodologies proposed are not directly applicable. The techniques found in finance as well as at NASA are dependent on past data and statistical analysis that is not available to the majority of the satellite community. Most of the methods examined also rely on a company profit requirement and a free market that does not exist in the Government environment. However, it might be possible to modify some of these methods to enable the Government satellite community to use a version of them that has been tailored for their specific use. Further research is necessary to see if this concept would be possible and to determine if it is possible to develop a quantitative method for assessing both the risk and reward of a decision in a manner that eliminates as much of the human bias as possible. It is also necessary to look further into other industries and the commercial satellite community to see if other risk management processes exist that are more Government satellite community friendly.