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On how to define, understand and describe risk

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  • Aven, Terje

Abstract

The prevailing perspectives and definitions of risk, at least in the engineering community, are based on probabilities. In this paper we argue that such perspectives and definitions are too narrow. The probability component of the risk concept should be replaced by uncertainty. By jumping directly into probabilities, important uncertainty aspects could easily be overlooked or truncated. In the paper we point at several extended risk definitions, and a formal structure for the various perspectives and definitions is developed. Fundamental concepts such as second-order probabilities and uncertainties are discussed. Examples are provided showing the importance of the choice of risk perspective in a risk assessment and decision-making context. The examples cover offshore operations, security and market price risks.

Suggested Citation

  • Aven, Terje, 2010. "On how to define, understand and describe risk," Reliability Engineering and System Safety, Elsevier, vol. 95(6), pages 623-631.
    • Handle: RePEc:eee:reensy:v:95:y:2010:i:6:p:623-631
    DOI: 10.1016/j.ress.2010.01.011
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    References listed on IDEAS

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    1. Terje Aven & Ortwin Renn, 2009. "On risk defined as an event where the outcome is uncertain," Journal of Risk Research, Taylor & Francis Journals, vol. 12(1), pages 1-11, January.
    2. Lee R. Abramson, 1981. "Some Misconceptions About the Foundations of Risk Analysis," Risk Analysis, John Wiley & Sons, vol. 1(4), pages 229-230, December.
    3. Eugene A. Rosa, 1998. "Metatheoretical foundations for post-normal risk," Journal of Risk Research, Taylor & Francis Journals, vol. 1(1), pages 15-44, January.
    4. Aven, Terje, 2007. "A unified framework for risk and vulnerability analysis covering both safety and security," Reliability Engineering and System Safety, Elsevier, vol. 92(6), pages 745-754.
    5. Bo Bergman, 2009. "Conceptualistic Pragmatism: A framework for Bayesian analysis?," IISE Transactions, Taylor & Francis Journals, vol. 41(1), pages 86-93.
    Full references (including those not matched with items on IDEAS)

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