Problems with Risk Matrices Using Ordinal Scales

Michael Krisper

Papers from arXiv.org

Abstract: In this paper, we discuss various problems in the usage and definition of risk matrices. We give an overview of the general process of risk assessment with risk matrices and ordinal scales. Furthermore, we explain the fallacies in each phase of this process and give hints on which decisions may lead to more problems than others and how to avoid them. Among those 24 discussed problems are ordinal scales, semi-quantitative arithmetics, range compression, risk inversion, ambiguity, and neglection of uncertainty. Finally, we make a case for avoiding risk matrices altogether and instead propose using fully quantitative risk assessment methods.

Date: 2021-03
New Economics Papers: this item is included in nep-rmg
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Citations: View citations in EconPapers (1)

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