Medium Complexity Methods

The cost-benefit analysis is about comparing the costs and benefits of a project or a major activity and using this comparison as a basis for decision-making for the implementation of the project/activity. The costs and benefits are in most cases described in monetary terms to allow comparison. However, it is sometimes difficult to express welfare gains, for example, as a monetary unit. If at the end of the analysis the benefit is higher than the total cost, a project/activity should be implemented. Experience and expected values are used to determine costs and benefits in advance.

The SWOT analysis is an instrument of strategic corporate management with which strengths and weaknesses of the company or its supply chain, as well as the opportunities and threats in the environment, can be uncovered. The resulting findings can be used to identify risks by comparing the requirements of the market with the potential of the company or supply chain. Finally, identified weaknesses are to be regarded as risks, whereby these can be both strategic and operational in nature.

The Monte Carlo simulation is one of the stochastic simulation methods in which random numbers are used within certain ranges for the calculation of the scenarios. To estimate risks or decisions under uncertainty, stochastic and dynamic methods are almost exclusively used today. With the help of Monte Carlo simulation, the impact of different decisions and their probability of occurrence can be estimated using synthetic data. It is a calculation method to simulate extreme cases, but also to secure everyday decisions. This makes it usable for a wide variety of industries.

Event Tree Analysis (ETA) is a method that examines the consequences of a particular event. Starting from an initial event, the tree is divided into two branches, whereby the upper one represents a positive and the lower one a negative development (event trees are usually drawn from left to right). Repeated branching of the tree shows possible effects of an initial event on a system. The aim of ETA is the identification of possible damage events. 

The Bow-Tie method can be considered to be a combination of earlier developed fault tree analysis (FTA) and event tree analysis (ETA) methods. A significant milestone in the history of Bow-Tie was the catastrophic incident on the Piper Alpha platform in 1988, which shook the oil and gas industry. In the early 1990s, the Royal Dutch Shell adopted the BowTie method as part of its methodological toolbox for managing risks. Nowadays, the Bow-Tie method is also used for risk management related to different transport modes such as maritime and aviation.