Principles of Risk Analysis: Decision Making under Uncertainty

Principles of Risk Analysis: Decision Making under Uncertainty

Principles of Risk Analysis: Decision Making under Uncertainty

Principles of Risk Analysis: Decision Making under Uncertainty


In every decision context there are things we know and things we do not know. Risk analysis uses science and the best available evidence to assess what we know and it is intentional in the way it addresses the importance of the things we don't know. Principles of Risk Analysis: Decision Making Under Uncertainty lays out the tasks of risk analysis in a straightforward, conceptual manner that is consistent with the risk models of all communities of practice. It answers the questions what is risk analysis? and how do I do this?

Distilling the common principles of the many risk tribes and dialects into serviceable definitions and narratives, the book provides a foundation for the practice of risk analysis and decision making under uncertainty for professionals from all walks of life. In the first part of the book, readers learn the language, models, and concepts of risk analysis and its three component tasks-risk management, assessment, and communication. The second part of the book supplies the tools, techniques, and methodologies to help readers apply the principles. From problem identification and brainstorming to model building and choosing a probability distribution, the author walks readers through the how-to of risk assessment. Addressing the critical task of risk communication, he explains how to present the results of assessments and how to develop effective messages.

The book's simple and straightforward style-based on the author's decades of experience as a risk analyst, trainer, and educator-strips away the mysterious aura that often accompanies risk analysis. It describes the principles in a manner that empowers readers to begin the practice of risk analysis, to better understand and use the models and practice of their individual fields, and to gain access to the rich and sophisticated professional literature on risk analysis.

Additional exercises as well as a free student version of the Palisade Corporation DecisionTools- Suite software and files used in the preparation of this book are available for download. "


I did not want to write this book. I wanted to buy it. Risk analysis is mature enough that it needs a principles text. There are many wonderful books available on the subject of risk. in fact, for years, in the training I have done, I used to schlep a dozen of them around for students to peruse. These I called the starter library. I urged people to buy them. Eventually I stopped carrying the books with me and started looking for that one book that would introduce students and professionals to the integrated topic of risk analysis. I never found it. So, I decided to go ahead and write it.

Risk analysis is a very parochial subject and practice. There are many tribes of risk practitioners, and they speak many dialects. To be honest, I am not entirely sure the field is ready for anything one might call a principles text. We may never have enough agreement on the principles to so ordain them as a community of practice.

Nonetheless, it has been my great fortune to have worked with a lot of people on many different applications of the risk analysis decision-making paradigm. This has included natural disasters, engineering, food safety, food defense, environmental issues, animals and plants, trade, quality management, business, finance, terrorism, defense applications, research, and other risk analysis applications. No matter how much the words and models changed from one application to the next, I found the basic principles were rather constant. Everyone was struggling to figure out how best to make good decisions when there are so many things we just don’t know for sure.

My major accomplishment in all of this was simply to learn the jargon of each field; then I stole liberally from the other fields, adapting ideas, methodologies, and models from one field to another. and it worked. a good approach to a risk problem in food safety is often a good approach to an engineering risk problem. Sometimes you only need to change an egg to a Tainter gate and salmonella to metal fatigue and you are halfway home. the toolbox is the same. We’re using the same math, the same probability. We all have to identify problems and evaluate solutions. We all have people waiting to hear what we have learned about the problems that affect them and the solutions they will rely upon.

This book was written to inform rather than to impress, although I hope the information you gain from it impresses you. Over many years of educating, training, and consulting in risk analysis, students and clients have taught me what people find most difficult about it. First, there are the “what is it” questions. Then there are the “how do you do this” questions. That is basically the outline for this book. Chapters 1–5 explain what risk analysis is, in a conceptual, big-picture way. These are the principles. Chapters 6–18 introduce the tools, techniques, and methodologies that will be most useful to new and intermediate risk analysts. These are the applications of the principles.

I have tried to keep the language of the book simple. the narrative is supported by many figures and a generous helping of text boxes. This is not the academic tome that provides an encyclopedic listing of the literature. I have consciously tried to limit the references to a few well-chosen resources an interested reader will find accessible and useful for learning and growing in risk analysis. I hope you will find it a helpful . . .

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