Modelling risk with network analysis

Collins English Dictionary tells us that a model is:

“a simplified representation or description of a system or complex entity, especially one designed to facilitate calculations and predictions.”

In his  book, Modelling Complex Projects, Terry Williams summarises:

“A model represents or describes perceptions of a real system, simplified, using a formal theoretically based language of concepts and their relationships (that enables manipulation of these entities), in order to facilitate management, control or understanding of that system.”

Williams goes on to detail the features a good model should exhibit:

  • Be informed by data that is objective, robust and informs the reality with which we have to deal;
  • Be theoretically sound, agreeing with the body of knowledge and management science;
  • Be coherent, ¬†self-sustaining, and consistent;
  • Be simplified to the requisite degree;
  • Address the complexity of the system; and
  • Add value and impact decisions.
Risks are represented as circles (nodes)