What time should you leave to catch a plane flight?
We all know intuitively to leave extra time for traffic and other uncertainties. But, how much time? Most risk analyses still ignore uncertainty, using single estimates of frequency and consequence.
When is it worth the effort to estimate the uncertainties explicitly? I’ll introduce the Expected Value of Including Uncertainty (EVIU) and show how it depends on the structure of your decision problem and value (or loss) function, not just the level of uncertainty.
I’ll illustrate it with common examples, including setting exposure standards, sizing electricity generation capacity, preparing for a pandemic … and, of course, when to leave for the airport.
Check out other decision making books
RISK-ACADEMY offers online courses
Informed Risk Taking
Learn 15 practical steps on integrating risk management into decision making, business processes, organizational culture and other activities!
ISO31000 Integrating Risk Management
Alex Sidorenko, known for his risk management blog http://www.riskacademy.blog, has created a 25-step program to integrate risk management into decision making, core business processes and the overall culture of the organization.
Advanced Risk Governance
This course gives guidance, motivation, critical information, and practical case studies to move beyond traditional risk governance, helping ensure risk management is not a stand-alone process but a change driver for business.
