Proceedings of the ASME 2012 International Design Engineering Technical Conferences & Computers and Information in Engineering Conference IDETC/CIE 2012 August 12-15, 2012, Chicago, IL, USA DETC2012/DTM-70399 TOWARD CONSIDERING RISK ATTITUDES IN ENGINEERING ORGANIZATIONS USING UTILITY THEORY Douglas Van Bossuyt * Complex Engineered Systems Design Laboratory School of Mechanical, Industrial, and Manufacturing Engineering Oregon State University Corvallis, OR 97331 Email: douglas.vanbossuyt@gmail.com Chris Hoyle Complex Engineered Systems Design Laboratory School of Mechanical, Industrial, and Manufacturing Engineering Oregon State University Corvallis, OR 97331 Chris.Hoyle@oregonstate.edu Irem Y. Tumer Complex Engineered Systems Design Laboratory School of Mechanical, Industrial, and Manufacturing Engineering Oregon State University Corvallis, OR 97331 Irem.Tumer@oregonstate.edu Andy Dong Design Lab Faculty of Architecture, Design, and Planning University of Sydney Sydney, NSW, 2006, Australia Andy.Dong@sydney.edu.au Toni Doolen School of Mechanical, Industrial, and Manufacturing Engineering Oregon State University Corvallis, OR 97331 Toni.Doolen@oregonstate.edu Richard Malak Design Systems Laboratory Department of Mechanical Engineering Texas A&M University College Station, Texas 77843 rmalak@tamu.edu ABSTRACT Design projects within large engineering organizations in- volve numerous uncertainties that can lead to unacceptably high levels of risk. Practicing designers recognize the existence of risk and commonly are aware of events that raise risk levels. How- ever, a disconnect exists between past project performance and current project execution that limits decision-making. This dis- connect is primarily due to a lack of quantitative models that can be used for rational decision-making. Methods and tools used to make decisions in risk-informed design generally use an expected value approach. Research in the psychology domain has shown that decision-makers and stakeholders have domain- specific risk attitudes that often have variations between individ- uals and between companies. Risk methods used in engineer- ing such as Failure Modes and Effects Analysis (FMEA), Fault * Address all correspondence to this author. Tree Analysis (FTA), and others are often ill-equipped to help stakeholders make decisions based upon risk-tolerant or risk- averse decision-making conditions. This paper focuses on the specific issue of helping stakeholders make decisions under risk- tolerant or risk-averse decision-making conditions and presents a novel method of translating engineering risk data from the do- main of expected value into a domain corrected for risk attitude. This is done by using risk utility functions derived from the Engineering-Domain-Specific Risk-T aking (E-DOSPERT) test. This method allows decisions to be made based upon data that is risk attitude corrected. Further, the method uses an aspirational measure of risk attitude as opposed to existing lottery methods of generating utility functions that are based upon past perfor- mance. An illustrative test case using a simplified space mis- sion designed in a collaborative design center environment is in- cluded. The method is shown to change risk-informed decisions 1 Copyright © 2012 by ASME