What is the validity of your risk forecast?

When talking to potential customers we oftentimes hear “ What is the validity of your risk forecast? ” What they mean is actually “how precise” our numbers are. That type of questions generally comes from individuals that confuse risk assessment with divinatory arts. They do not recognize that performing a risk assessment is completely different than reading a crystal ball. Another common objection comes from people that claim that no one can evaluate probabilities of events because of complexities, etc.…

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Future predictions, uncertainty and Unpredictability

Future predictions, uncertainty and Unpredictability Some authors state that the key difference between human intelligence and animal intelligence is that human perform “conscious and not infrequent planning for the future”. Maybe that started with a “where do we search for food today” question. As we often discuss in this blog, planning in the face of uncertainty requires some notion of what is likely or unlikely to happen. From here, it only seems “natural” that we must all have some intuitive…

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BBQ risks probability uncertainty unpredictability

risks probability uncertainty unpredictability Today it’s kinda windy, some clouds, I feel just fine, but my wife thinks it’s cold when the sun goes incognito behind the clouds. Quite an uncertain weather, right? Focus now on the possible downward outcome: rain later in the day, during our open air BBQ (rain is the hazard, BBQ is the part of the system which will be potentially hit). We can measure the related uncertainty using the POP (Probability of Precipitation) released by…

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Our judgements are clouded by prejudices and misconceptions.

Our judgements are clouded by prejudices and misconceptions. Indeed, we humans often assess the probability of an event by asking ourselves if there are “cognitively available” examples. Those are readily available through memory as Kahneman (Nobel Prize in Economics) and Tversky demonstrated in a series of papers published between 1971 and 1984. Among those papers the most popular is likely the one entitled “Prospect Theory”,1979 quoted at page 212 in our book. Availability heuristic The phenomenon highlighted by Kahneman and…

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