Risk Assessment Based on Total Efficient Risk Priority Number Using Data Envelopment Analysis

Risk management in organizations is a major process, one of the sub-processes of which is the risk assessment. The simplest assessment methods have introduced risk as a function of the probability of occurrence and the severity. Using this definition, various methods for risk assessment have been developed. The development of these methods has introduced an indicator called the total efficient risk priority number (TERPN) in which more effective factors were considered to determine the importance of the risks. In addition to its many advantages, this indicator has limitations that if they are handled, it can have better performance in terms of effectiveness and efficiency, and the present study aims to eliminate these limitations.

The proposed method is a step-by-step process consisting of 11 for risk assessment in which after identifying risk areas, risks, corrective and, preventive measures the process is performed using a combined method with data envelopment analysis.

To validate the proposed method with a sample example, it was found that this method selects risks that, based on both the TERPN index and the proposed index, causes a further reduction in the level of intolerable risks by 3.8%. Regarding the cost of corrective and preventive measures, it can be seen that based on the prioritization of the proposed method, the cost will be reduced by about 26.8% compared to the former method.

In order to evaluate the risk, in addition to maintaining the positive features of the TERPN method, this research method eliminates the limitations and in the major implementation of the risk management process, it is possible to achieve a higher level of productivity (effectiveness and efficiency).