Introduction to Risk Analysis

Course Code:

ISE 456

Course Type:

Area Elective

Credits:

3

Theoric:

3

Practice:

0

Laboratory Hour:

0

ECTS:

5

Prerequisite Courses:

Statistical Applications for Industrial Engineers

Course Language:

English

Courses given by:

Zeynep Gökçe İşlier

Course Objectives:

The purpose of this course is to have the students acquire a good understanding of the concept of risk analysis. To this end, fundamentals of risk assessment process, risk-based decision criteria, elementary approaches to financial risk, and dynamic strategies to manage risks are discussed.

Course Content:

Topics covered will include risk management process, probability and statistics concepts, basic methods of decision making in uncertain environments, utility theory concepts, stochastic dominance for risk assessment and risk analysis in financial market.

Course Methodology:

1: Lecture by instructor, 2: Lecture by instructor with class discussion, 3: Problem solving by instructor, 4: Use of simulations, 5: Case studies, 6: Project Review

Course Evaluation Methods:

A: Written exam, B: Multiple-choice exam C: Project, D: Presentation by student

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Course Learning Outcomes

Course Learning Outcomes	Detailed Program Outcomes	Teaching Methods	Assessment Methods
1. Implementation of risk management process in engineering projects.	2b, 4a, 5b, 11a	1, 2, 5	A, B, C, D
2. Ability to identify, and evaluate risks and develop a risk response behaviour for case studies.	2b, 4a, 5b, 11a	1, 2, 5	A, B, C, D
3. Ability to present case studies.	5b, 7c, 7d, 9a, 9b, 10a,	5, 6	C, D
4. Implementation of probability theory in risk analysis.	1a, 1b, 6c,	1, 2, 3,	A, B
5. Tree analysis in risk evaluation and Bayes theory implementation.	1a, 1b, 6c,	1, 2, 3,	A, B
6. Introduction of expected utility theory for risk measurement.	1a, 1b, 6c,	1, 2, 3,	A, B
7. Utilization of stochastic dominance theory for utility function assessment.	1a, 1b, 6c,	1, 2, 3,	A, B
8. Dynamic risk analysis by introducing simulation.	1a, 1b, 4a, 5b, 10a,	1, 2, 3, 4	A, B
9. Risk Analysis for basic contract types in financial market.	1a, 1b, 6c, 10a,	1, 2, 3,	A, B

Course Flow

COURSE CONTENT
Week	Topics	Study Materials
1	INTRODUCTION TO RISK	Textbooks, Course Notes
2	RISK MANAGEMENT PROCESS	Textbooks, Course Notes
3	RISK MANAGEMENT PROCESS	Textbooks, Course Notes
4-5	RISK MANAGEMENT PROJECT PRESENTATIONS	Textbooks, Course Notes
6	MEASUREMENT OF RISK	Textbooks, Course Notes
7	PROBABILITY THEORY IN RISK ANALYSIS	Textbooks, Course Notes
8	QUANTITATIVE MODELING FOR RISK ASSESSMENT	Textbooks, Course Notes
9	MIDTERM – TREE ANALYSIS	Textbooks, Course Notes
10	EXPECTED VALUE CRITERION	Textbooks, Course Notes
11	NATURE OF RISK PREFERENCES	Textbooks, Course Notes
12	DYNAMIC RISK ANALYSIS	Textbooks, Course Notes
13	RISK ASSESMENT IN FINANCE	Textbooks, Course Notes
14	RISK ASSESMENT IN FINANCE	Textbooks, Course Notes

Recommended Sources

RECOMMENDED SOURCES
Textbook	Chavas, J. P., Risk Analysis in Theory and Practice, 1st Edition, Elsevier, 2004.
Additional Resources	Hertz, D. and H. Thomas, Risk Analysis and its Applications, John Wiley & Sons, 1983 Luenberger, D.G., Investment Science, Oxford University Press, 1988.

Material Sharing

MATERIAL SHARING
Documents	Lecture notes, https://coadsys.yeditepe.edu.tr
Assignments	Team Project Report
Exams	Midterm, Project Presentations, Final Exam

Assessment

ASSESSMENT
IN-TERM STUDIES	NUMBER	PERCENTAGE
Participation	1	15
Midterm	1	40
Team Project	1	45
Total		100
CONTRIBUTION OF FINAL EXAMINATION TO OVERALL GRADE		35
CONTRIBUTION OF IN-TERM STUDIES TO OVERALL GRADE		65
Total		100

Course’s Contribution to Program

COURSE'S CONTRIBUTION TO PROGRAM OUTCOMES
No	Program Learning Outcomes	check √
1a	Adequate knowledge in mathematics, science and engineering subjects pertaining to the relevant discipline,	√
1b	Ability to use theoretical and applied knowledge in these areas in complex engineering problems.	√
2a	Ability to identify, formulate, and solve complex engineering problems,
2b	Ability to select and apply proper analysis and modeling methods for this purpose.	√
3a	Ability to design a complex system, process, device or product under realistic constraints and conditions, in such a way as to meet the desired result,
3b	Ability to apply modern design methods for this purpose.
4a	Ability to devise, select and use modern techniques and tools needed for analyzing and solving complex problems encountered in engineering practice.	√
4b	Ability to employ information technologies effectively.
5a	Ability to design experiments for investigating complex engineering problems or discipline specific research questions,
5b	Ability to conduct experiments, gather data, analyze and interpret results for investigating complex engineering problems or discipline specific research questions.	√
6a	Ability to work efficiently in intra-disciplinary teams,
6b	Ability to work efficiently in multi-disciplinary teams,
6c	Ability to work individually.	√
7a	Ability to communicate effectively in Turkish, both orally and in writing,
7b	Knowledge of a minimum of one foreign language,
7c	Ability to write effective reports and comprehend written reports, prepare design and production reports,	√
7d	Ability to make effective presentations,	√
7e	Ability to give and receive clear and intelligible instructions.
8a	Recognition of the need for lifelong learning, ability to access information, ability to follow developments in science and technology,
8b	Ability to continue to educate him/herself.
9a	Consciousness to behave according to ethical principles and professional and ethical responsibility.	√
9b	Knowledge on standards used in engineering practice.	√
10a	Knowledge about business life practices such as project management, risk management, change management.	√
10b	Awareness in entrepreneurship and innovation.
10c	Knowledge about sustainable development.
11a	Knowledge about the global and social effects of engineering practices on health, environment, and safety,	√
11b	Knowledge about contemporary issues of the century reflected into the field of engineering.
11c	Awareness of the legal consequences of engineering solutions.

ECTS

ECTS ALLOCATED BASED ON STUDENT WORKLOAD BY THE COURSE DESCRIPTION
Activities	Quantity	Duration (Hour)	Total Workload (Hour)
Course Duration (Excluding the midterm hour: 13x Total course hours)	13	3	39
Hours for off-the-classroom study (Pre-study, practice)	6	2	12
Project	1	25	25
Hours for off-the-classroom study (Midterm)	1	15	15
Hours for off-the-classroom study (Final)	1	20	20
Midterm	1	2	2
Final	1	2	2
Total Work Load			115
Total Work Load / 25 (h)			4.6
ECTS Credit of the Course			5

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Introduction to Risk Analysis

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