A Roadmap to the Use of Multicriteria and Portfolio Decision Analysis to the Design and Deployment of Risk Matrices

Risk matrices are adopted and recommended by many organizations, but risk analysis literature has shown that the way they are usually constructed violates some basic theoretical principles, giving rise to inconsistent risk ratings. This talk exploits ways in which multiple criteria and portfolio decision analyses can improve the design and the deployment of risk matrices. In particular, it introduces ‘value risk-matrices’, built with the MACBETH multicriteria method and MACBETH DSS in three modelling steps. Firstly, a value measurement scale is constructed on each impact dimension, and the value scales are additively aggregated into a cumulative scale of global attractiveness. Secondly, a subjective probability scale is built through the use of MACBETH. Thirdly, a value risk-matrix is designed based on the cumulative value scale, the subjective probabilities scale and the identification of risk categories. The (value) risk-matrix is the basis for identifying, prioritising and selecting risk mitigation actions, through the use of the recent portfolio decision analysis component of the MACBETH DSS. This new modelling approach for Improving Risk Matrices (IRIS) is illustrated with data from case studies developed at ALSTOM Power (Switzerland) and at the Occupational Health and Safety unit of the Regional Health Administration of Lisbon and Tagus Valley (Portugal).