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Sept 4, 2006Risk and Public Policy What is Risk? The classical answer Risk = uncertainty + damage Risk =, where a hazard is a source of danger s i is a scenario i which leads to some outcome p i is the probability or frequency of the occurrence of scenario i x i is the level of damage that results from the occurrence of s i So Risk={ } over all i.
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Sept 4, 2006 Risk and Public Policy
Defining Risk
BUSH 689.601September 4, 2006
Sept 4, 2006 Risk and Public Policy
Hazard“What are we worried
about?”
Transmission“How does the hazard get to
people”
Impact“What does it do to people other things
we care about?”
Risk Management“What can we do
about it?”
Mechanism Dose and Exposure
Dose and Response
Design institutions (sanctions and
incentives)
Duration Pathways Differential Effects
Manage exposure
Maximum effect
Scope Uncertainty Establish norms
Components of Risk Assessment
Sept 4, 2006 Risk and Public Policy
What is Risk?The classical answer
Risk = uncertainty + damageRisk = , where a hazard is
a source of dangersi is a scenario i which leads to some outcomepi is the probability or frequency of the occurrence
of scenario ixi is the level of damage that results from the
occurrence of si
So Risk={<si, pi, xi>} over all i.
safeguardshazard
Sept 4, 2006 Risk and Public Policy
The Risk Curve
Sept 4, 2006 Risk and Public Policy
Classic Form of the Risk Curve
Sept 4, 2006 Risk and Public Policy
Example of Risk Curve Comparisons
Sept 4, 2006 Risk and Public Policy
Risk Curve Densities
Sept 4, 2006 Risk and Public Policy
Bayesian Updating
p(Фm/E) = p(Фm )
where p(Фm/E) is your posterior probability of believing Фm, given the new evidence E;
p(Фm) is your “prior”;
p(E/ Фm) is the likelihood that you’d have gotten evidence E if Фm was true;
and p(E) is the probability of the evidence (how compelling is it?).
⎥⎦⎤
⎢⎣⎡
)()/( m
EpEp φ
