Risk management decision-making: the analytic hierarchy process approach

Abstract

This research discusses the possibility of using analytic hierarchy process (AHP) as a decision making tool for risk management. AHP is widely applied in supply chain risk management and project risk management. The application of AHP in risk management has not yet been explored. Risk management is an established and accepted process as evidenced by much research in this area and published regulations and standards. Despite this, decision making in risk management tends to be informal depending on intuition and marked by an absence of formal analyses. To see if AHP can be applied to risk management, a distinction between risk management and risk management decision making is made. Potential application in risk management is discussed. An example of risk management decision making problem is presented, to show how AHP structured a risk management decision making problem.