Confidence in risk assessments

Jonathan Rougier

Journal of the Royal Statistical Society Series A, 2019, vol. 182, issue 3, 1081-1095

Abstract: Risk is assessed with varying degrees of confidence, and the degree of confidence is relevant to the risk manager. The paper proposes an operational framework for representing confidence, based on an expert's current beliefs about how her beliefs might be different in the future. Two modelling simplifications, ‘no unknown unknowns’ and a homogeneous Poisson process, make this framework trivial to apply. This is illustrated for assessing an exceedance probability for a large event, with volcanic risk as a specific example. The paper ends with a discussion about risk and confidence assessments for national scale risk assessment, including several further illustrations.

Date: 2019
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