Principles of Risk Analysis

Charles Yoe is a professor of economics at Notre Dame of Maryland University, Baltimore, U.S.A., and an independent risk analysis consultant and trainer. Working extensively for U.S. and other government agencies as a consultant and risk analyst, his wide range of risk experience includes international trade, food safety, natural disasters, public works, homeland security, ecosystem restoration, resource development, navigation, planning, and water resources. As a consultant to private industry, his work includes a discrete but wide variety of concerns. He has trained professionals from more than one hundred countries in risk analysis and conducted customized risk training programs for government agencies and private industry in over two dozen nations.

The Basics
What is Risk?
What Is Risk Analysis?
Why Do Risk Analysis?
Who Does Risk Analysis?
When Should We Do Risk Analysis?
Organization of Book


Uncertainty
Uncertainty from 75,000 Feet
The Uncertainty on Your Desk
Being Intentional About Uncertainty


Risk Management
Identifying Problems and Opportunities
Risk Estimation
Risk Evaluation
Risk Control
Risk Monitoring
Risk Management Models


Risk Assessment
What Makes a Good Risk Assessment?
Definitions
Risk Assessment Activities
Risk Assessment Models
Risk Assessment Methods


Risk Communication
Definitions
Internal Risk Communication
External Risk Communication


Problem Identification for Risk Management
What’s a Problem? What’s an Opportunity?
Becoming Aware of Problems and Opportunities
Problem and Opportunity Identification Techniques
The P&O Statement


Brainstorming
What Can You Brainstorm?
Background
Avoid Problems in Your Process
A Few Good Techniques
3× Yeah
Group Evaluations with Colored Dots
Do You Need a Facilitator?
Addendum


Opportunity Costs and Trade-Offs
Economics for Risk Managers
Economics and Decision Making
Economic Basis for Interactions among People
Principles of the Economy as a Whole
Making Trade-Offs
Economic Analysis


Qualitative Risk Assessment
Risk = Probability × Consequence
A Generic Process
More or Less Risk
Risk Narratives
Evidence Maps
Ordering Techniques
The Risk Matrix
Qualitative Risk Assessment Models
MCDA
A Semiquantitative Risk Assessment Example


The Art and Practice of Risk Assessment Modeling
Types of Models
A Model-Building Process
Simulation Models
Required Skill Sets


Probability Review
Two Schools of Thought
Probability Essentials
How Do We Get Probabilities?
Working with Probabilities
Why You Need to Know This


Choosing a Probability Distribution
Graphical Review
Strategy for Selecting a Probability Distribution
Example 1
Example 2
A Dozen Useful Probability Distributions for Risk Assessors


Probability Elicitation
Probability Words
Subjective Probability
When to Do an Elicitation
Making Judgments under Uncertainty
Responding to Heuristics
The Elicitation Protocol
Calibration
Multiple Experts


Monte Carlo Process
Background
A Two-Step Process
How Many Iterations?
Sampling Method
An Illustration


Probabilistic Scenario Analysis
Common Scenarios
Types of Scenario Analysis
Scenario Comparisons
Tools for Constructing Scenarios
Adding Probability to the Scenarios
An Example


Sensitivity Analysis
Qualitative Sensitivity Analysis
Quantitative Sensitivity Analysis
The Point


Presenting and Using Assessment Results
Understand Your Assessment Output Data Before You Explain It
Examine the Quantities
Examine the Probabilities
Examine Relationships
Answer the Questions
Visualization of Data
Decision Making under Uncertainty


Message Development
Communication Models
The Need for Message Strategies for Risk Communication
Crisis Communication
Message Mapping
Impediments to Risk Communication
Developing Risk Communication Messages


Appendix A: The Language of Risk and ISO 31000
ISO 31000
Enterprise Risk Management
Observations


Appendix B: Using Palisade’s Decision Tools Suite
TopRank
@RISK
PrecisionTree


Index


All chapters include an introduction, summary, and references.