Aven - Risk Analysis

This edition first published 2015

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Library of Congress Cataloging-in-Publication Data

Aven, Terje.

Risk analysis / Terje Aven. Second edition.

pages cm

Previous edition: 2008.

Includes bibliographical references and index.

ISBN 978-1-119-05779-6 (cloth)

1. Risk assessmentMathematical models. 2. RiskMathematical models.

3. UncertaintyMathematical models. I. Title.

HD61.A938 2015

338.5dc23

2015018045

A catalogue record for this book is available from the British Library.

ISBN: 9781119057796

This book is about risk analysisbasic ideas, principles and methods. Both theory and practice are covered. A number of books exist presenting the many risk analysis methods and tools, such as fault tree analysis, event tree analysis and Bayesian networks. In this book we go one step back and discuss the role of the analyses in risk management. How such analyses should be planned, executed and used, such that they meet the professional standards for risk analyses and at the same time are useful in a practical decision-making context. In the book we review the common risk analysis methods, but the emphasis is placed on the context and applications. By using examples from different areas, we highlight the various elements that are part of the planning, execution and use of the risk analysis method. What are the main challenges we face? What type of methods should we choose? How can we avoid scientific mistakes? The examples used are taken from, among others, the transport sector, the petroleum industry and ICT (Information and Communication Technology). For each example we define a decision-making problem, and show how the analyses can be used to provide adequate decision support. The book covers both safety (accidental events) and security (intentional acts).

This book is based on the recommended approach to risk analysis described and discussed in Aven (2012a,d). The basic idea is that risk analysis should produce a broad risk picture, highlighting uncertainties beyond expected values and probabilities. The aim of the risk analysis is to predict unknown physical quantities, such as the explosion pressure, the number of fatalities, costs and so on, and assess uncertainties. A probability is not a perfect tool for expressing the uncertainties we have to acknowledge that the assigned probabilities are subjective probabilities conditional on a specific background knowledge. The assigned probabilities could produce poor predictions. The main component of risk is uncertainty, not probability. Surprises relative to the assigned probabilities may occur and by just addressing probabilities such surprises may be overlooked.

It has been a goal to provide a simplified presentation of the material, without diminishing the requirement for precision and accuracy. In this book, technicalities are reduced to a minimum, instead ideas and principles are highlighted. Reading the book requires no special background, but for certain parts it would be beneficial to have a knowledge of basic probability theory and statistics. It has, however, been a goal to reduce the dependency on extensive prior knowledge of probability theory and statistics. The key statistical concepts are introduced and discussed thoroughly in the book. Appendix A summarises some basic probability theory and statistical analysis. This makes the book more self-contained, and it gives the book the required sharpness with respect to relevant concepts and tools.

We have also included a brief appendix covering basic reliability analysis, so that the reader can obtain the necessary background for calculating the reliability of a safety system.

This book is primarily about planning, execution and use of risk analyses, and it provides clear recommendations and guidance in this context. However, it is not a recipe-book, telling you which risk analysis methods should be used in different situations. What is covered, is the general thinking process related to the planning, execution and use of risk analyses. Examples are provided to illustrate this process.

This book is based on and relates to the research literature in the field of risk, risk analysis and risk management.

Some of the premises for the approach taken in the book as well as some areas of scientific dispute are looked into in a special Discussion chapter (). The issues addressed include the risk concept, the use of risk acceptance criteria and the definition of safety critical systems.

The target audience for the book is primarily professionals within the risk analysis and risk management fields, but others, in particular managers and decision-makers, can also benefit from the book. All those working with risk-related problems need to understand the fundamental principles of risk analysis.

This book is based on a Norwegian book on risk analysis (Aven et al. 2008), with co-authors Willy Red and Hermann S. Wiencke. The present version is, however, more advanced and includes topics that are not included in Aven et al. (2008).

The terminology used in the book is summarised in Appendix D.

Our approach means a humble attitude to risk and the possession of the truth, and hopefully it will be more attractive also to social scientists and others, who have strongly criticised the prevalent thinking of risk analysis and evaluation in the engineering environment. Our way of thinking, to a large extent, integrates technical and economic risk analyses and the social scientist perspectives on risk. As a main component of risk is uncertainty about the world, risk perception has a role to play to guide decision-makers. Professional risk analysts do not have the exclusive right to describe risk.