I Risk Recognition
What are the assumptions/assertions?
Unintended outcomes and unexpected consequences?
What oversight is or should be in place?
What criteria should be met to ensure some reasonable level of security?
Global or national issue?
Will science fix the problems created?
Risk vs. Reward
Risk to whom?
How is cost defined?
Over what period of time?
Who should be part of this conversation?
Loss from past, present, or planned activities
Public Health Services
Science and Technology
Protects from injury
Warn of natural disaster
Description of the risk or potential risk.
Transfer the risk from the imagination to language.
Methodology to creating meaning to the imagined risk.
Incite conversation to obtain a deeper understanding of the risk.
Without being able to accurately describe risk our ability to manage it is inhibited.
Describing the risk allows you to explore the risk and figure out what it takes to manage it.
The tendency to be more confident than correct pervades the discussion of risk. (overconfidence bias)
The tendency to search for and only acknowledge finding the things we are seeking in the first place. This impedes the searching of facts and results into a self fulfilling prophecy.
Lacking the vocabulary necessary to reasonably describe the risks in scientific innovations
Sars , West Nile Virus and Bird Flu
Movies provide vivid and persistent images
Realistic filmmaking provides counter terrorism perspective
Hearing information, visual images, and reading
Recall past events as vividly as possible
Small, predictable losses do not require insurance
Rare failure so consequences are still around
Burning of fossil fuels
Is the risk real
Known to be exposed- not known to be exposed
Known to science- not known to science
Controllable- not controllable
Certainly not fatal- certainly fatal
Focuses on the role of numbers in the assessment and management of risk
Risk quantification is to determine and to describe the truth of risk.
Risk measures are often intangible abstractions.
Risk Measures enable us to imagine, describe and observe risk in an orderly way
Internal and external
Quantitative and qualitative
Financial and non financial
Short term and long term
Measures used to communicate levels of risk are tied to a particular threat or peril
Threat level set as a color code e.g. red, yellow, green
Richter Scale for earthquakes
Hurricane categories 1-5
Measurement system for calibrating risk and the measures themselves are constantly being improved.
Many things such as volcanic eruptions are difficult to predict when they will occur.
Keystone of risk management
Decisions must be made in the present in preparation for an uncertain and unknowable future.
If we are sure an event will occur, we assign it a one hundred percent probability. If we are sure an event will not occur, we assign it a probability of zero percent.
We do not need precise measurement to find the concept of risk and probability measures useful
Risk managers can usefully apply measurement and concepts to risk assessment and management, absent exacting computation.
Conceived in 1944 by RAND, workable method in 1950s and 60s
Involves polling anonymous panels of knowledgeable, informed experts.
Gathers opinions from experts through series of rounds in order to reach a best solution or answer to a problem.
Mixes new information about an event with existing information to refine initial expectations.
Provides a mathematical way of supplementing intuition about the odds of an event or scenario with actual information.
Map and Model
Relationships between risk characteristics
How risk emerges, behaves, causes loss
Make connections between cause and effect and origin of a risk with impact
Drawings, flow-charts, matrices, Venn Diagrams, logic trees
Predict advancing threats
Plan, prepare, prevent, and protect from threats
Loss frequency and severity
II Risk Resolution
To take actions required to avoid or eliminate the chance of loss
The most efficient thing to do