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Artificial Intelligence and global risk




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Computer systems are becoming maintain their leadership position in information

commonplace; indeed, they are almost technology, and to regain it in manufacturing.
ubiquitous. We find them central to the
functioning of most business, governmental, Software Risk Management is a proactive
military, environmental, and health-care approach for minimizing the uncertainty and
organizations. They are also a part of many potential loss associated with a project. A risk is
educational and training programs. But these an event or condition that, if it occurs, has a
computer systems, while increasingly affecting positive or negative effect on a project’s
our lives, are rigid, complex and incapable of objectives. The three common characteristics of
rapid change. To help us and our organizations risk are
cope with the unpredictable eventualities of an (1) It represents a future event,
ever-more volatile world, these systems need (2) It has a probability of occurring of greater
capabilities that will enable them to adapt readily than 0%, but less than 100%, and
to change. They need to be intelligent. Our (3) The consequence of the risk must be
national competitiveness depends increasingly on unexpected or unplanned for. Future events can
capacities for accessing, processing, and be categorized as opportunity-focused (positive
analyzing information. The computer systems risk) if their consequences are favorable, or as
used for such purposes must also be intelligent. threat-focused (negative risk) if their
Health-care providers require easy access to consequences are unfavorable.
information systems so they can track health-care
delivery and identify the most recent and
effective medical treatments for their patients'
conditions. Crisis management teams must be
(AI) is a field of study based on the premise that
able to explore alternative courses of action and
intelligent thought can be regarded as a form of
support decision making. Educators need systems
computation—one that can be formalized and
that adapt to a student's individual needs and
ultimately mechanized. To achieve this, however,
abilities. Businesses require flexible
two major issues need to be addressed. The first
manufacturing and software design aids to
issue is knowledge representation, and the second
is knowledge manipulation. Within the
intersection of these two issues lies mechanized A classic example of this is the pre-Copernican
intelligence. model in which the Sun and planets revolved
around the Earth. In such a model, it was
prohibitively difficult to predict the position of
The study of artificial intelligence has a long
planets. However, in the Copernican revolution
history, dating back to the work of British
this Earth-centric model was replaced with a
mathematician Charles Babbage (1791–1871)
model where the Earth and other planets revolved
who developed a special-purpose "Difference
around the Sun.
Engine" for mechanically computing the values
of certain polynomial functions. Similar work This new model dramatically increased the

was also done by German mathematician ability of astronomers to predict celestial events.

Gottfried Wilhem von Leibniz (1646–1716), who Arithmetic with Roman numerals provides a

introduced the first system of formal logic and second example of how knowledge

constructed machines for automating calculation. representation can severely limit the ability to

George Boole, Ada Byron King, Countess of manipulate that knowledge. Both of these

Lovelace, Gottlob Frege, and Alfred Tarski have examples stress the important relationship

all significantly contributed to the advancement between knowledge representation and thought.

of the field of artificial intelligence.

Knowledge representation:

It has long been recognized that the language and

models used to represent reality profoundly
impact one's understanding of reality itself. When
humans think about a particular system, they
form a mental model of that system and then
proceed to discover truths about the system.
These truths lead to the ability to make
predictions or general statements about the
system. However, when a model does not
sufficiently match the actual problem, the Through artificial intelligence, engineers and

discovery of truths and the ability to make computer scientists are capable of creating

predictions becomes exceedingly difficult. machines that perform dangerous tasks in place
of humans. Here, a police robot handles a live solution (or a reasonably good approximation of
bomb. a solution) to such a problem, one must
selectively explore the problem's search space

In AI, a significant effort has gone into the The difficulty here is that if part of the search

development of languages that can be used to space is not explored, one runs the risk that the

represent knowledge appropriately. Languages solution one seeks will be missed. Thus, in order

such as LISP, which is based on the lambda to ignore a portion of a search space, some

calculus, and Prolog, which is based on formal guiding knowledge or insight must exist so that

logic, are widely used for knowledge the solution will not be overlooked. Heuristics is

representation. Variations of predicate calculus a major area of AI that concerns itself with how

are also common languages used by automated to limit effectively the exploration of a search

reasoning systems. These languages have well- space. Chess is a classic example where humans

defined semantics and provide a very general routinely employ sophisticated heuristics in a

framework for representing and manipulating search space. A chess player will typically search

knowledge. through a small number of possible moves before

selecting a move to play. Not every possible
Knowledge manipulation: move and countermove sequence is explored.
Only reasonable sequences are examined. A large
Many problems that humans are confronted with part of the intelligence of chess players resides in
are not fully understood. This partial the heuristics they employ
understanding is reflected in the fact that a rigid
A heuristic-based search results from the
algorithmic solution—a routine and
application of domain or problem-specific
predetermined number of computational steps—
knowledge to a universal search function. The
cannot be applied. Rather, the concept of search
success of heuristics has led to focusing the
is used to solve such problems. When search is
application of general AI techniques to specific
used to explore the entire solution space, it is said
problem domains. This has led to the
to be exhaustive. Exhaustive search is not
development of expert systems capable of
typically a successful approach to problem
sophisticated reasoning in narrowly defined
solving because most interesting problems have
domains within fields such as medicine,
search spaces that are simply too large to be dealt
mathematics, chemistry, robotics, and aviation.
with in this manner, even by the fastest
computers. Therefore, if one hopes to find a
Another area that is profoundly dependent on performed continually over the life of a program,
domain-specific knowledge is natural language from initiation to retirement.
processing. The ability to understand a natural
There are a variety of risks that confront the
language such as English is one of the most
global software industry, as illustrated in Figure
fundamental aspects of human intelligence, and
1 which will be discussed in more detail. The
presents one of the core challenges for the AI
characteristics of the legal, social, economic and
community. Small children routinely engage in
competitive environments impose constraints and
natural language processing, yet it appears to be
opportunities that help to define the nature of the
almost beyond the reach of mechanized
risks (and their exposure levels) for suppliers,
computation. Over the years, significant progress
buyers, and other stakeholders in the software
has been made in the ability to parse text to
acquisition and development process.
discover its syntactic structure. However, much
of the meaning in natural language is context-
dependent as well as culture-dependent, and
capturing such dependencies has proved highly
resistant to automation.

Introduction (Global risk)

Providing insights to support informed decision

making is the primary objective of Risk
Management. In practice, Risk Management Figure 1: Risk and the Global Software Industry
concentrates on performing bottom-up, detailed,
The Concept of Positive Risk:
continuous assessment of risk and opportunity. It
focuses on addressing the day-to-day operational Positive risk refers to risk that we initiate
risks that a program faces. Risk Management ourselves because we see a potential opportunity
follows a two-stage, repeatable and iterative along with a potential for failure (the negative
process of assessment (i.e., the identification, risk associated with “loss” of the opportunity).
estimation and evaluation of the risks confronting There are several kinds of opportunities that can
a program) and management (i.e., the planning be leveraged in projects if responses to them are
for, monitoring of, and controlling of the means well-timed and prompt action is initiated.
to eliminate or reduce the likelihood or These include:
consequences of the risks discovered). It is
 Business opportunities, e.g., product analysis. In addition, many risk management
development, customer care during the project methods may be based on risk quantification.
life cycle, and focused attention on high profit Users may not have the ability to provide
margin activities. accurate estimates for probability and
loss/opportunity projections required for a
 Operational opportunities, e.g., value-
reliable risk analysis. Table-based approaches
added, do what is important, minimize rework.
can sometimes be too biased or too coarse for
proper risk prioritization. Risks may also have
 Systemic opportunities, which typically
different implications for different stakeholders
mean long-term savings resulting from improved
(or, conversely, be perceived differently by
safety, insurance, etc.
different stakeholders). Existing risk
management methods may not provide support
The Most Common/Serious
for dealing with these differences. Risks may
Software Risks:
also affect a project in more than one way. For
There are numerous reasons as to why formal
example, most risk management approaches
risk management is difficult to implement
focus on cost, schedule or quality risks, but there
effectively. These include the sheer number of
may be combinations of risks or other
risk factors that have been identified in the
characteristics such as future required
literature. For example, Capers Jones assessed
maintenance, company reputation, or potential
several hundred organizations and observed over
liability/litigation that should be considered
100 risk factors (of which 60 he discusses in
important in influencing the decision-making
detail in [Jones, 1994]). He observed, however,
process. Finally, many current risk management
that few projects have more than 15 active risk
techniques may be perceived as too costly or too
factors at any one time, but many projects have
complex to use. Simple, straightforward risk
approximately six simultaneous risk factors.
management techniques that require an
acceptable amount of time to produce results
Another reason for the relatively low
might be the answer.
implementation of formal risk management
The Risk Management Map contains five
methods in practice are, according to [Kontio,
evolutionary stages of risk management
1998], the fact that risk is an abstract or fuzzy
capability, defined as:
concept for which users lack the necessary tools
to more accurately define risk for a deeper
 Problem Stage: Describes through the use of measures to anticipate
circumstances when risk identification is not seen predictable risks, that is characterized by the use
as positive. Characterized by lack of of metrics to anticipate failures and predict future
communication which causes a subsequent lack events. This stage involves the ability to learn
of coordination. Crisis management is used to from, adapt to, and anticipate change,
address existing problems. Risks ignored or representing a completely proactive approach to
tracked in ad-hoc fashion. risk management. Quantified analysis used to
determine resolution cost/benefit for the project.
 Mitigation Stage: Details a shift from
crisis management to risk management. People  Opportunity Stage: This represents a
become aware of risks but do not systematically positive vision of risk management that is used to
confront them. There is uncertainty as to how to innovate and shape the future. Risks are
communicate risks. Risks are usually recorded, perceived as an opportunity to save money and
tracked and handled as discovered. do better than planned. Risk, like quality, is
everyone’s responsibility. A continuous process
of identifying, communicating and resolving
risks in an open and non-threatening environment
 Prevention Stage: Discusses the shift of
is used. Admissions that some things are not
risk management as solely a manager’s activity
known are acceptable and allowances are made
to risk management as a team activity. This is a
for their existence using a best-case, worst-case
transitional stage from avoidance of risk
scenario. Risk statistics are used to make
symptoms to identification and elimination of
organizational/process improvements.
root cause of risk, characterized by team, and
sometimes customer, involvement. For risk
on a detailed plan that evolves over time.
management to succeed it must occur at each
level within an organization. This stage
represents a turning point from a reactive to a
more proactive approach to risk management.
Risks systematically … analyzed, planned,
tracked and resolved.

 Anticipation Stage: Describes the shift

from subjective to quantitative risk management,
Conclusion: 3. Russel, Stuart J and Peter Norvig.
Artificial Intelligence: A Modern
AI is a young field and faces many complexities.
Approach. Englewood Cliffs, NJ:
Nonetheless, the Spring 1998 issue of AI
Prentice Hall, 1994.
Magazine contained articles on the following
innovative applications of AI: This is suggestive
of the broad potential of AI in the future.

1. "Case- and Constraint-Based Project

Planning for Apartment Construction"
2. "CREWS–NS: Scheduling Train Crews in
The Netherlands"
3. "An Intelligent System for Case Review
and Risk Assessment in Social Services"
4. "CHEMREG: Using Case-Based
Reasoning to Support Health and Safety
Compliance in the Chemical Industry"
5. "MITA: An Information-Extraction
Approach to the Analysis of Free-Form
Text in Life Insurance Applications" .

1. Luger,George F and William A.
Stubblefield. Artificial Intelligence:
Structures and Strategies for Complex
Problem Solving. Redwood City, CA:
Benjamin/Cummings Publishing
Company, 1993.
2. Mueller, Robert A., and Rex L. Page.
Symbolic Computing with LISP and
Prolog. New York: Wiley and Sons,