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The U.S. Air Force seeks to measure and prioritize risk as part of
its Capabilities Review and Risk Assessment (CRRA) process. The
goal of the CRRA is to identify capability shortfalls, and the
risks associated with those shortfalls, to influence future systems
acquisition. Many fields, including engineering, medicine and
finance, seek to model and measure risks. This research utilizes
various risk measurement approaches to propose appropriate risk
measures for a military context. Specifically, risk is modeled as a
non-negative random variable of severity. Four measures are
examined: simple expectation, a risk-value measure, tail
conditional expectation, and distorted expectation. Risk measures
are subsequently used to weight the objective function coefficients
in a system acquisition knapsack problem.
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