Quantitative Risk Analysis: Method And Process

• Main Author: Anass BAYAGA
• Format: Article
• Language: English
• Published: Romanian National Institute of Statistics 2010-03-01
• Series: Revista Română de Statistică
• Subjects: Quantitative Risk Analysis; likelihood of occurrence of risk; Risk modeling; impact of occurrence of risk
• Online Access: http://www.revistadestatistica.ro/Articole/2010/A6_en%203_2010.pdf
• ISSN: 1018-046X; 1844-7694

Recent and past studies (King III report, 2009: 73-75; Stoney 2007;Committee of Sponsoring Organisation-COSO, 2004, Bartell, 2003; Liebenberg and Hoyt, 2003; Reason, 2000; Markowitz 1957) lament that although, the introduction of quantifying risk to enhance degree of objectivity in finance for instance was quite parallel to its development in the manufacturing industry, it is not the same in Higher Education Institution (HEI). In this regard, the objective of the paper was to demonstrate the methods and process of Quantitative Risk Analysis (QRA) through likelihood of occurrence of risk (phase I). This paper serves as first of a two-phased study, which sampled hundred (100) risk analysts in a University in the greater Eastern Cape Province of South Africa.The analysis of likelihood of occurrence of risk by logistic regression and percentages were conducted to investigate whether there were a significant difference or not between groups (analyst) in respect of QRA.The Hosmer and Lemeshow test was non-significant with a chi-square(X2 =8.181; p = 0.300), which indicated that there was a good model fit, since the data did not significantly deviate from the model. The study concluded that to derive an overall likelihood rating that indicated the probability that a potential risk may be exercised within the construct of an associated threat environment, the following governing factors must be considered: (1) threat source motivation and capability (2) nature of the vulnerability (3) existence and effectiveness of current controls (methods and process).