The growing interest in decarbonising electricity systems together with advances in communication and information technologies that may support the application of demand and generation solutions to solve network problems has initiated reviews of traditional operational practices and security grid standards in a number of jurisdictions. The key concern is that these historical practices and standards, mostly developed in the 1950‘s, might be inappropriate for the new emerging systems as they may pose entry barriers for both renewable generation and smart grid technologies. This thesis presents a probabilistic cost-benefit framework for the development of future efficient operating and design strategies and network security standards enabled by new technologies. By optimally balancing the costs of network constraints with various operational measures composed of preventive and corrective control actions, considering potential outages of network and generation facilities, optimal network capacity that could be released to network users in real time is determined along with its impacts on network design. This framework is compatible with smart grid concepts which integrate new generation, network, and demand technology. Together with the aforementioned framework, a full optimisation model that serves to scrutinise the characteristics of the proposed probabilistic standards in the presence of high penetration of wind is developed by means of a Benders algorithm. To reduce the computational times and memory usage, a novel technique that eliminates redundant scenarios (i.e. outages) that do not contribute towards the optimum solution and hence simplifies the optimisation procedure is presented and successfully tested. The studies demonstrate that various operational measures (such as generation and demand response) can be effectively used to release additional network capacity with small (or even nil) increases in risk. It is also demonstrated that the GB system would benefit in terms of network investment and congestion costs if the changes proposed were adopted.