Bayesian analysis: Critical issues related to its scope and boundaries in a risk context

Terje Aven

Reliability Engineering and System Safety, 2020, vol. 204, issue C

Abstract: Bayesian analysis constitutes an important pillar for assessing and managing risk, but it also has some weaknesses and limitations. The main aims of the present paper are to summarize the scope and boundaries of Bayesian analysis in a risk setting, point to critical issues and suggest ways of meeting the problems faced. The paper specifically addresses the Bayesian perspective on probability and risk, probability models, the link between probability and knowledge, and Bayesian decision analysis. A main overall conclusion of the paper is that risk analysis has a broader scope and framing than Bayesian analysis, and that it is important for risk assessment and management to acknowledge this and build approaches and methods that extend beyond the Bayesian paradigm. To adequately assess and handle risk it is necessary to see beyond risk as commonly defined in Bayesian analysis.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reensy:v:204:y:2020:i:c:s0951832020307109

DOI: 10.1016/j.ress.2020.107209

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