Upper Bound for Failure Risk in Networks

Effective Risk Assessment in Resilient Communication Networks

“…This contribution can be treated as an extension of the two previously published papers [6,7]. The new contribution can be summarized as follows: (1) The first paper [6] elaborates on the issue of lack of subadditivity of VaR, and shows that this risk measure can be successfully used in communications since lack of subadditivity is not a concern in practice.…”

“…(14), the exact formulas can be used instead of approximations proposed in [7] on the basis of the results found by Takács [35]. Now, for each service d i we define only a pair of macrocomponents ðU i ; D i Þ constituting the partitioning of the whole set of states:…”

“…Therefore, while the final statement is the same, now we increase the confidence on validity of this statement. (2) As the main contribution of this paper, we conceive the extension of [7], where the model for finding the upper bound on risk measures related to random failures in communication networks is presented. Our extension presented here is considerable: (a) we have extended the set of compensation policies to the ones that are more realistic than the ones shown in [7]; (b) while [7] uses a simple model based on results elaborated in a seminal work [35], here we present a more general model based on results derived in [36]; (c) the presented numerical studies are much broader than the ones presented before.…”

“…Secondly, businesses may be more interested in the variability of loss rather than its mean value, which does not usually capture changes in network behaviour. Here, we use our previous works on the shift of interest in resilient networks design [5][6][7] as a basis. There, we discuss using business-related risk measures, such as Value-at-Risk (VaR).…”