Probability does not exists but does risk exist

Probability does not exists – but does risk exist? Why uncertainty should replace probability in the definition of risk Terje Aven University of Stavanger Risk and uncertainty: ontologies and methods University of Amsterdam, The Netherlands 23 -25 January 2013

Kjerag bolt 1000 m down Peter is to jump onto the stone Does risk exist? YES !

Peter falls down A He is killed C Uncertainty U - the occurrence is unknown Inter-subjective Objective

Statfjord A Does risk exist? YES !

Government building Oslo 22 July 2011

Risk (A, C, U) A: Event, (C, U) C: Consequences U: Uncertainty

Risk description Q (A, C, U) (C, U) K C’ Q: Measure of uncertainty (e. g. P) K: Background knowledge C’: Specific consequences

Risk perspective Probability-based Historical data + Knowledge dimension + Surprises

The need for seeing beyond probability

Subjective/knowledge-based probability • P(A|K) =0. 1 • The assessor compares his/her uncertainty (degree og belief) about the occurrence of the event A with drawing a specific ball from an urn that contains 10 balls (Lindley, 2000. Kaplan and Garrick 1981). K: background knowledge

Probability is a tool Person a: P(A) = 0. 01 Person b: P(A) = 0. 1 Probability is subjective - «it does not exist» (de Finetti)

Does an objective probability exist ? • Not to reflect uncertainty but in some cases to reflect variation x xxxxx xx x x Frequentist probability

The need for seeing beyond probability

P(head) = 0. 5 P(attack) = 0. 5 Strong knowledge Poor knowledge

John offers you a game: throwing a die • ” 1, 2, 3, 4, 5”: 6 • ” 6”: -24 What is your risk?

Risk (C, P): • 6 5/6 • -24 1/6 Is based on an important assumption – the die is fair

“Background knowledge” Assumption 1: … Assumption 2: … Assumption 3: … Assumption 4: … … Assumption 50: The platform jacket structure will withstand a ship collision energy of 14 MJ Assumption 51: There will be no hot work on the platform Assumption 52: The work permit system is adhered to Assumption 53: The reliability of the blowdown system is p Assumption 54: There will be N crane lifts per year … Assumption 100: … … Model: A very crude gas dispersion model is applied

Risk concept cont. • There is a need for seeing beyond the probabilities – must better cover the knowlede and lack of knowledge dimension

• A = leakage

• Mediocristan (Normalistan) • Extremistan (black swans) Nassim N. Taleb

Threats Known unknowns (A’, C’, Q, K) Unknown unknowns (”black swans”)

Analysis Risk analysis Cost-benefit analysis, Risk acceptance criteria … Management review and judgment Risk-informed decision making Decision

Conclusions • «Risk exists but not risk descriptions»