Probability does not exists – but does risk exist? Why uncertainty should replace probability in...

Probability does not exists – but does risk exist?

Why uncertainty should replace probability in the definition of risk

Terje Aven

University of Stavanger

Risk and uncertainty: ontologies and methods

University of Amsterdam, The Netherlands23-25 January 2013

Peter is to jump onto the stone

Kjerag bolt

1000 m down

Does risk exist? YES !

Peter falls down A He is killed C

Uncertainty U - the occurrence is unknown

Inter-subjective Objective

Statfjord A

Does risk exist? YES !

Government building Oslo 22 July 2011

Risk

(A,C,U)

A: Event, C: Consequences

U: Uncertainty

(C,U)

Risk description

(A,C,U)

Q: Measure of uncertainty (e.g. P)

K: Background knowledge

C’: Specific consequences

(C,U)

C’

Q

K

Probability-based

Historical data

Probability-based

Historical data

Knowledge

dimension +

+

Surprises

Risk perspective

The need for seeing beyond probability

Subjective/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. Kaplan and Garrick 1981).

K: background knowledge

Probability is a tool

Person a: P(A) = 0.01

Person b: P(A) = 0.1

Probability is subjective -

«it does not exist» (de Finetti)

Does an objective probability exist ?

• Not to reflect uncertainty but in some cases to

reflect variation

x x x x xx x x x x x x x x

Frequentist probability

The need for seeing beyond probability

P(head) = 0.5

P(attack) = 0.5

Strong knowledge

Poor knowledge

John offers you a game: throwing a die

• ”1,2,3,4,5”: 6

• ”6”: -24

What is your risk?

Risk

(C,P):

• 6 5/6

• -24 1/6

Is based on an important

assumption – the die is fair

Assumption 1: …Assumption 2: …Assumption 3: …Assumption 4: ……Assumption 50: The platform jacket structure will withstand

a ship collision energy of 14 MJAssumption 51: There will be no hot work on the platformAssumption 52: The work permit system is adhered toAssumption 53: The reliability of the blowdown system is pAssumption 54: There will be N crane lifts per year…Assumption 100: ……

“Background knowledge”

Model: A very crude gas dispersion model is applied

Risk concept cont.

• There is a need for seeing beyond the

probabilities – must better cover the

knowlede and lack of knowledge dimension

•Mediocristan (Normalistan)

•Extremistan (black swans)

Nassim N. Taleb

Threats

Known unknowns

Unknown unknowns(”black swans”)

(A’, C’, Q, K)

Risk analysisCost-benefit analysis,

Risk acceptance criteria

…

Managementreview and judgment

Decision

Analysis Management

Risk-informed decision making

Conclusions

• «Risk exists but not risk

descriptions»