Model formulation support in risk management

Risk management is a broad field that integrates many disciplines to tackle issues of different nature. Consequently, many different modeling paradigms have been proposed for problem solving and decision making in risk management. The purpose of this paper is to show that despite their differences, the modeling paradigms can be accommodated into one generic model formulation process that consists of: (i) problem structuring, (ii) problem formalization, and (iii) problem resolution. We will show this for the most frequently used modeling paradigms in risk management: (i) decision modeling, (ii) data/knowledge modeling, and (iii) dynamic modeling. The benefits of this generic modeling approach are many. Most important is that the risk analyst can focus more on the problem content than on analytical issues which ultimately helps in the communication to the decision maker. The theoretical discussion will be accompanied by representative examples from the field of risk management. The paper closes with a discussion and a research agenda concerning model formulation support in risk management.