PRISM: improved risk management

Risk management is widely recognized as a valuable approach, and in almost all applications, to our knowledge, it is conducted using a risk matrix as the central tool. Until recent years, risk matrices were not examined for their efficacy in efficient risk reduction. Several authors examined risk matrices and found them flawed and we briefly review their findings. They instead recommended using traditional analytic techniques but did not offer clear guidance for those unfamiliar with these approaches. The intent of this paper is to provide improved risk management approaches that are both quickly accessible to the reader and efficiently implementable in organizations. In this paper, we define a heuristic approach and compare that to a typical risk matrix methodology using generated data to show improved performance. We also demonstrate that employment of optimization is both superior to the use of risk matrices and often improves recommendations developed with the heuristic. These approaches are simple to implement, and we have named them PRISM and PRISM + for clarity.