Standard Article

Managing R&D and Risky Projects

  1. Louis Anthony Cox Jr.1,2

Published Online: 15 JUN 2010

DOI: 10.1002/9780470400531.eorms0490

Wiley Encyclopedia of Operations Research and Management Science

Wiley Encyclopedia of Operations Research and Management Science

How to Cite

Cox, L. A. 2010. Managing R&D and Risky Projects. Wiley Encyclopedia of Operations Research and Management Science. .

Author Information

  1. 1

    University of Colorado, Cox Associates and Department of Mathematical and Statistical Sciences, Denver, Colorado

  2. 2

    University of Colorado, Department of Risk Analysis, Denver, Colorado

Publication History

  1. Published Online: 15 JUN 2010

Abstract

This article discusses quantitative concepts and methods for making risk management decisions about R&D and other uncertain projects. Such decisions include what projects to fund, the order in which to attempt different activities within a project, when to abandon projects that are not working out as hoped, and how to structure the incentives of project managers and investors to take best advantage of the opportunities represented by risky projects.

Keywords:

  • risk management;
  • multicriteria optimization;
  • investment strategy;
  • optimization algorithm;
  • real options;
  • R&D;
  • portfolio;
  • moral hazard;
  • differential games;
  • principal-agent;
  • simulation-optimization;
  • Gittins index;
  • index policy