Wednesday, March 9, 2011

Risk Management on Amazing Race

On this last leg of The Amazing Race, the contestants had to fly from Sydney to Tokyo. When arriving at the airport they were faced with a choice of two flights:
  1. Fly direct to Tokyo, arriving at 6:15 AM
  2. Fly via Hong Kong, arriving at 6:00 AM
This generated a lot of discussion with most teams opting for the less risky flight. But then, after more thought, a few teams changed their minds and opted for the flight with a connection. It sounded like a bad idea to take that risk for a possible 15 minute savings on a 12 hour flight. So I had to analyze it using classic Risk Management techniques.

First we need one assumption. Let's make one with what seems to be my luck and about what I've seen watching this show: 20% chance of any flight of that length being 2 hours late.

What we do in this simple analysis is run both scenarios and total up the arrival times. 6:15 plus 20% of an extra 120 minutes = 6:39 AM arrival time.
Now let's compare this to the flight with a connection scenario.
When you add another flight to this equation you get slightly more complicated math but still doable. Arrival time is 6:00 plus a 32% chance of adding 120 minutes plus a 4% chance of adding 240 minutes = 6:48 AM

So, if my 20% assumption was correct, the smart move was to take the direct flight.
How did it work out for our teams? Check it out below at about minute 10.
One of the flights ends up being delayed by an hour and twenty minutes. It's fun to use risk management in real life.

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