14 Nov 2011 ... beyond risk assessments and decision analysis tools in decision analysis tools in
decision-making situations involving high risks. Terje Aven.
Reflections on the need for seeing beyond risk assessments and decision analysis tools in decision-making situations involving high risks Terje Aven University of Stavanger, Norway Conference on Nuclear Risk and Public Decision Making Decision-Making 14-16th November 2011 Paris
What is Risk?
C,U
C: the consequences of the activity U: uncertainty y ((what will C be?))
What is Risk?
ACU A,C,U
A: initiating event C: the consequences of the activity y U: uncertainty (what will C be?)
Where is the P b bilit ? Probability
Risk
General concept
U…
How to describe or measure risk
P…
Risk description p
Specific events, consequences, Probabilities frequencies, …
(C Q (C’, Q, K)) C’ : Specific consequences Q: Measure of uncertainty (often P) K: Knowlegde that Q is based on
Risk Threats,, hazards, Consequences C
p Risk description
Specific events, consequences, Probabilities frequencies, …
Uncertainty
(C U) (C,U)
(C Q (C’, Q, K))
(A C U) (A,C,U) C’ : Specific consequences Q: Measure of uncertainty (often P) K: Knowlegde that Q is based on
Formula
Optimal/right decision
Risk description
What is acceptable risk
• ------ P =1 x 10-4
Risk-based decision-making
Expected utility theory
A
B
Eu(X) = 0.3
Eu(X) = 0.5
Choose alternative B
Analysis
Risk analysis Risk acceptance criteria Cost-benefit analysis Decision analysis
Management Management review and judgment
Decision
Limitations
Uncertainties Risk Assessment
P Other concerns
I f Informing i
Decisionmaking
Misconception (risk-based decision-making)
Formula
Optimal/right decision
Misconception (decision analysis)??
Formula
Optimal/right decision
Cost-benefit analysis
NPV
n
t0
at t 1 i
Expected net present value = E[NPV] Uncertainties and risk not addressed beyond expected values
x
Law of large numbers
• The average converges g to the expected value • (X1 + X2 + … + Xn)/n
EX1
Analysis Risk Ri k analysis l i Risk acceptance criteria Cost-benefit analysis Decision analysis
Management Management review and judgment
Decision
Expected utility theory
• E[u(X)]
Decision problem
Consequences
Preferences
Uncertainties
Values
Decision problem
Consequences
Preferences
Uncertainties
Values
U Uncertainties t i ti
Adequate tool (P) ( )
Probability
Relative R l ti frequency f Interpretation Pf
Jugdmental/ knowledge-based g probabilities P
Knowledge-based probability
• P(A|K) =0.1 • The assessor compares his/her uncertainty (degree og belief) about the occurrence of the event A with drawing a specific ball from an urn that contains 10 balls (Lindley, 2000).
K: background knowledge
• The probability of an event is the price at which the person assigning the probability is neutral between buying and selling a ticket that is worth one unit of payment if the event occurs, and worthless if not
Knowledge-based probability
• P(A|K) =0.1 • The assessor compares his/her uncertainty (degree og belief) about the occurrence of the event A with drawing a specific ball from an urn that contains 10 balls (Lindley, 2000).
K: background knowledge
• The need for seeing beyond P
John offers you a game: throwing a die
• ”1 1,2,3,4,5 2 3 4 5”:: • ”6”:
What is your risk?
6 -24
Risk • Expected value – 24 x
1/6 + 6 x 5/6 = 1
(C,P): • 6
5/6
24 1/6 • -24
Is based on an important assumption – the die is fair
• While probabilities can always be assigned, the origin and amount of information supporting the assignments are not reflected by the numbers produced
Approaches reflecting the need for seeing beyond P Interval probabilities p 0.1 ≤ P(A) ≤ 0.5
Aven, T. and Zio, E. (2011) Some considerations on the treatment of uncertainties in risk assessment for practical decision-making. Reliability Engineering and System Safety, 96, 64-74.
An adjusted approach
P,E ,
P,E ,
UF
P E
Probabilities Expected values
UF
Uncertainty factor assessment
Uncertainty factors
• How important are they? - sensitivity iti it - uncertainties
Uncertainty factor importance Degree of sensitivity
Significant
9
3
2,3
Moderate
8
6
1,5
Minor
7 M d t Moderate
Si ifi Significant t
Mi Minor
Degree of uncertainty
Risk descriptions
PE P,E
S K
UF
Decision problem
Consequences
Preferences
Uncertainties
Values
Uncertainties Preferences, values Integration
Adequate tool (P) Tool
Formula
Optimal/right decision
Analysis Risk Ri k analysis l i Risk acceptance criteria Cost-benefit analysis Decision analysis
Management Management review and judgment
Decision
• Analysis informs, nothing more • Always needs to see beyond the analyses • Improvements of the analyses
The balance
Development - Protection
U
Preferences values Decision analysis: y integration
Analysis Risk Ri k analysis l i Risk acceptance criteria Cost-benefit analysis Decision analysis
Management Management review and judgment
Decision
