Using microworlds to study critical infrastructure protection—the effect of incentives on risk management

Abstract

A computer simulated microworld was used to study risk management in a critical infrastructure context. 36 students assumed the role of an electric distribution company Chief Executive Officer (CEO) making decision on how to spend resources between investments in risk reduction and other investments. We studied the effect of differences in terms of the incentives to invest in risk reduction and the extent that the participants had access to a risk assessment. We found that both independent variables influenced the total resources spent on risk reduction and total losses due to storms. If the company had to bear a larger part of the total losses due to a storm their propensity to invest in risk reduction increased. In addition, if the participants were provided with a simple risk assessment to support their decisions they invested more resources in risk reduction, and they were also more successful in limiting the total losses due to storms. (Less)