- Report
Tools for risk assessment under uncertainty
This report reviews a range of best practice analytical tools and processes that can be used to support risk assessment across a spectrum of problems of differing complexity and uncertainty.
Risk assessment is a process that is used to support decision-making about uncertain future events and their consequences for society. Risk occurs when the something of value is at stake and the outcome is uncertain. Risk is generally considered to have at least 3 elements:
- an event or occurrence that may take place
- the potential consequences (or outcomes) of that event
- the likelihood that the event and its consequences will eventuate
Risk management problems can be characterised according to their complexity and the level of knowledge that we have about the potentially hazardous event(s) and its consequences. They range from:
- Relatively well-known, recurrent hazards, in which the prospect of future events and their consequences can be predicted by analysis of past occurrences (eg car accidents and food contamination), to
- Highly complex or novel risk problems where it is uncertain what threat the event poses to a range of values and interests, and it is difficult to predict the likelihood that they will eventuate.
The varied contextual settings and complexity of risk problems means that are many different approaches to risk assessment. Each involves different ways of structuring the collection and analysis of available information that are tailored to the problem under consideration and the kinds of data and knowledge that can be applied to it.
Risk assessment is typically approached in one of two ways:
- ‘Predict then act’ (probabilistic risk analyses) – The aim of the analysis is to provide the best available predictions of the occurrence of uncertain events and their associated consequences.
- ‘Monitor and adapt’ – The focus is on identifying and reducing vulnerability to threats by ensuring that decisions are adaptable, robust to uncertainty and can withstand surprises.
This report reviews a range of best practice analytical tools and processes that can be used to support each approach across a spectrum of risk problems of differing complexity and uncertainty.
