 Statistical Risk and its TreatmentMark Jablonowski Chapter 1 in Precautionary Risk Management, 2006, pp 1-16 from Palgrave Macmillan Abstract: Abstract A great deal of day-to-day risk management, be it on a personal, business or community level, proceeds “statistically”. That is, we attempt to make sense of random or chance phenomena using averages and other representations that allow us to make reasonable decisions over time. We will see that much of what we call “risk” is amenable to statistical treatment in terms of aggregates over time. This allows us to identify the best, or optimal, course of action with respect to these risks using basic economic theory. The same principles we apply to rational optimization, in business and in life in general, apply to statistical risks. The statistical nature of many risks also permits verification of our results over time. Statistical analysis does have boundaries of applicability, however. We must be very careful not to extend statistical analysis beyond these boundaries. To understand, and manage, the full spectrum of risks we deal with, we must understand both the strengths and the very real limitations of the statistical approach. Keywords: Black Ball; Risk Management; Statistical Risk; Fault Tree; Annual Probability (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62765-9_1 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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