Risk prioritisation using the analytic hierarchy process

This study demonstrated how to use the Analytic Hierarchy Process (AHP) to prioritise risks of an insurance company. AHP is a technique to structure complex problems by arranging elements of the problems in a hierarchy, assigning numerical values to subjective judgements on the relative importance of the elements and synthesizing the judgements to determine which elements have the highest priority. The study is motivated by wide application of AHP as a prioritisation technique in complex problems. It aims to show AHP is able to minimise some limitations of risk assessment technique using likelihood and impact. The study shows AHP is able to provide consistency check on subjective judgements, organise a large number of risks into a structured framework, assist risk managers to make explicit risk trade-offs, and provide an easy to understand and systematic risk assessment process.