Open AccessThe decision support model for risk management
Author(s) -
Warwick D. Smith
Publication year - 2004
Publication title -
bulletin of the new zealand society for earthquake engineering/nzsee quarterly bulletin
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.917
H-Index - 36
eISSN - 2324-1543
pISSN - 1174-9857
DOI - 10.5459/bnzsee.37.4.149-155
Subject(s) - expected shortfall , risk management , risk analysis (engineering) , conditional probability , risk assessment , expected utility hypothesis , computer science , expected value , actuarial science , operations research , statistics , mathematics , business , computer security , finance
Risk management decisions often demand the allocation of scarce resources in mitigation of different hazards. A quantitative basis for decision-making can be provided by a detailed risk assessment, in which the current risk and those that obtain under proposed projects can be evaluated. The average annual loss, or expected value, is not a useful measure of extreme risk. The conditional expected value, calculated for a series of probability ranges, provides measures of the risk that can be assembled into a decision table so that informed decisions can be made. The conditional expected value can be calculated even when the losses are only available in terms of a cumulative probability function.