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On the Treatment of Uncertainty and Variability in Making Decisions About Risk

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  • Vicki M. Bier
  • Shi‐Woei Lin

Abstract

Much attention has been paid to the treatment of dependence and to the characterization of uncertainty and variability (including the issue of dependence among inputs) in performing risk assessments to avoid misleading results. However, with relatively little progress in communicating about the effects and implications of dependence, the effort involved in performing relatively sophisticated risk analyses (e.g., two‐dimensional Monte Carlo analyses that separate variability from uncertainty) may be largely wasted, if the implications of those analyses are not clearly understood by decisionmakers. This article emphasizes that epistemic uncertainty can introduce dependence among related risks (e.g., risks to different individuals, or at different facilities), and illustrates the potential importance of such dependence in the context of two important types of decisions—evaluations of risk acceptability for a single technology, and comparisons of the risks for two or more technologies. We also present some preliminary ideas on how to communicate the effects of dependence to decisionmakers in a clear and easily comprehensible manner, and suggest future research directions in this area.

Suggested Citation

  • Vicki M. Bier & Shi‐Woei Lin, 2013. "On the Treatment of Uncertainty and Variability in Making Decisions About Risk," Risk Analysis, John Wiley & Sons, vol. 33(10), pages 1899-1907, October.
  • Handle: RePEc:wly:riskan:v:33:y:2013:i:10:p:1899-1907
    DOI: 10.1111/risa.12071
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    References listed on IDEAS

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    Cited by:

    1. Roshanak Nateghi & Seth D. Guikema & Yue (Grace) Wu & C. Bayan Bruss, 2016. "Critical Assessment of the Foundations of Power Transmission and Distribution Reliability Metrics and Standards," Risk Analysis, John Wiley & Sons, vol. 36(1), pages 4-15, January.
    2. Morales-Torres, Adrián & Escuder-Bueno, Ignacio & Serrano-Lombillo, Armando & Castillo Rodríguez, Jesica T., 2019. "Dealing with epistemic uncertainty in risk-informed decision making for dam safety management," Reliability Engineering and System Safety, Elsevier, vol. 191(C).
    3. Matteo Spada & Peter Burgherr, 2020. "Comparative Risk Assessment for Fossil Energy Chains Using Bayesian Model Averaging," Energies, MDPI, vol. 13(2), pages 1-21, January.
    4. Roxane Foulser‐Piggott & Gary Bowman & Martin Hughes, 2020. "A Framework for Understanding Uncertainty in Seismic Risk Assessment," Risk Analysis, John Wiley & Sons, vol. 40(1), pages 169-182, January.
    5. Christoph Scheingraber & Martin A. Käser, 2019. "The Impact of Portfolio Location Uncertainty on Probabilistic Seismic Risk Analysis," Risk Analysis, John Wiley & Sons, vol. 39(3), pages 695-712, March.
    6. Suo, Weilan & Wang, Lin & Li, Jianping, 2021. "Probabilistic risk assessment for interdependent critical infrastructures: A scenario-driven dynamic stochastic model," Reliability Engineering and System Safety, Elsevier, vol. 214(C).

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