Affiliations: KPA Ltd., Raanana, Israel, University of Torino, Torino, Italy and Center for Risk Engineering, New York University, Polytechnic Institute, New York, NY, USA. E-mail: ron@kpa.co.il | Department of Finance and Risk Engineering and Center for Risk Engineering, Polytechnic Institute, New York University, Brooklyn, NY, USA. E-mail: ctapiero@poly.edu
Abstract: The definition and the management of quality has evolved and assumed a variety of approaches, responding to an increased variety of needs. In industry, quality and its control has responded to the need of maintaining an industrial process operating as “expected”, reducing the process sensitivity to uncontrolled disturbances (robustness). By the same token, in services, quality has been defined as “satisfied customers obtaining the services they expect”. Quality management, like risk management, has a general connotation of dealing with current or potential problems, instead of opportunities. Quality, just as risk, is measured as a consequence of events defined by statistical properties. In this work, we propose an approach were quality and risk converge, both conceptually and technically, expanding the areas of concern confronted by both domains. This integrated view presents new challenges and significant opportunities to modern management methodology. The paper analyzes, with examples, a prospective convergence between quality and risk, and their management. Throughout such applications, we demonstrate the merging of quality management with risk management, in order to improve both the quality and risk management processes. In the analysis we refer to four quadrants proposed by Nassim Taleb for mapping consequential risks and their probability structure. Three case studies are provided, one on risk finance, a second one on management of telecommunication systems and a third one on risk based testing of web services.
