Risk Management of Contract Portfolios in IT Services: The Profit-at-Risk Approach

Kauffman, Robert J.; Sougstad, Ryan

doi:10.2753/mis0742-1222250102

Cited by 39 publications

(9 citation statements)

References 56 publications

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“…The purpose is protection of surplus in either individual or joint operations, through a technological approach to risk management that diminishes the variance of payoff-related outcomes. When information security involves joint investments to increase the firms' degree of confidence in the outcomes and payoffs, this suggests a dual formulation of our model-one that emphasizes the minimization of costs or cost efficiency in the achievement of surplus within some bounds of statistical confidence [28].…”

Section: Applications Limitations and Future Researchmentioning

confidence: 99%

Relative importance, specific investment and ownership in interorganizational systems

2008

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Implementation and maintenance of interorganizational systems (IOS) require investments by all the participating firms. Compared with intraorganizational systems, however, there are additional uncertainties and risks. This is because the benefits of IOS investment depend not only on a firm's own decisions, but also on those of its business partners. Without appropriate levels of investment by all the firms participating in an IOS, they cannot reap the full benefits. Drawing upon the literature in institutional economics, we examine IOS ownership as a means to induce value-maximizing noncontractible investments. We model the impact of two factors derived from the theory of incomplete contracts and transaction cost economics: relative importance of investments and specificity of investments. We apply the model to a vendor-managed inventory system (VMI) in a supply chain setting. We show that when the specificity of investments is high, this is a more critical determinant of optimal ownership structure than the relative importance of investments. As technologies used in IOS become increasingly redeployable and reusable, and less specific, the relative importance of investments becomes a dominant factor. We also show that the bargaining mechanism-or the agreed upon approach to splitting the incremental payoffs-that is used affects the relationship between these factors in determining the optimal ownership structure of an IOS.

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Section: Applications Limitations and Future Researchmentioning

confidence: 99%

Relative importance, specific investment and ownership in interorganizational systems

2008

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“…Kauffmann et al [5] presents a novel approach for the analysis of IT contract risks. However, this work is different from ours as their focus is not on analyzing contract renewal decisions.…”

Section: Related Workmentioning

confidence: 99%

Understanding the role of sentiment analysis in contract risk classification

Guven¹,

Steiner²,

Ge³

et al. 2014

2014 IEEE Network Operations and Management Symposium (NOMS)

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This paper describes a novel approach for identifying IT outsourcing contract renewal risk ahead of contract expiration by taking into account not only client satisfaction survey results (in the form of numeric scores), but also client interview transcripts (in the form of unstructured text). By using machine learning techniques, the interview transcripts are automatically processed to identify important topics of interest along with an associated sentiment for each topic. The output of the sentiment analysis is then used as an input (in addition to client satisfaction survey scores) to classify contract renewal risk.We show that, by using sentiment analysis to transform unstructured textual information into structured input, the classification accuracy of nonrenewing contracts, in particular, is substantially enhanced. Moreover, the topics with negative sentiments can shed light on the root causes of problems leading to contract non-renewal.

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“…In the oil and gas industry, there are portfolios of opportunities involving risk in drilling expensive, unsuccessful wells at one site that correlate with those of other sites [5]. Additionally, investments in information technology can be considered as a portfolio, more so than other corporate infrastructure investments since information technology shares both financial and nonfinancial resources in a coordinated manner [6]. Critical infrastructure within a region or of a certain type, such as dams, chemical plants, and power plants, may be viewed as portfolios of assets with an associated portfolio of risks (due to failure) and associated investments that can also be viewed as portfolios.…”

Section: Introductionmentioning

confidence: 99%

Managing A Portfolio of Risks

Keisler

Linkov

2011

Wiley Encyclopedia of Operations Research and Management Science

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Managers and stakeholders concerned about all sorts of entities often face a complex mixture of threats originating from multiple sources. Traditional management approaches that deal with multiple decisions, such as project portfolio management and risk assessment, are focused on single sources of risk or integrate risks using simplified assumptions (e.g., simple addition). Current challenges -including emergency response to natural disasters, homeland security threats, emerging materials, and correlated events -and an uncertain future with respect to societal concerns -for example climate change, economic development, and social/religious instabilities -require integrated application of these methods. This chapter describes a range of risk approaches that enable a flexible approach to risk portfolio management. Decision quality serves as an integrating framework for applying a mix of analytic methods to facilitate successful risk portfolio management. Methods including portfolio decision analysis and risk management as well as other tools from risk analysis, utility theory, and modern portfolio theory from finance help to address complexities of current risk portfolio management challenges.

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Risk Management of Contract Portfolios in IT Services: The Profit-at-Risk Approach

Cited by 39 publications

References 56 publications

Relative importance, specific investment and ownership in interorganizational systems

Relative importance, specific investment and ownership in interorganizational systems

Understanding the role of sentiment analysis in contract risk classification

Managing A Portfolio of Risks

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