President's Notebook
APEGA
If APEGA is to more effectively manage risk, we must first understand what APEGA means by risk. Given the diversity of perspectives on the word and subject, one way to refine APEGA’s understanding of risk is to accept some of the word’s fundamental truths. I’ll initiate that discussion with the following points, drawn from my professional experience. 1. Risk is inherently multidimensional. This reality is a characteristic that leads directly to the value of risk as a concept worth managing, making it more useful than just focusing on probability, consequences, or uncertainty. For example, we acknowledge that there are low probability- high consequence risks, just as there are high probability-low consequence risks. These extremes alone show that risk is multi-dimensional. 2. Risk must be considered for a specified timeframe. If risk is considered for a specified consequence — say, the Earth being affected by a climate-changing asteroid strike — quantitative probability estimates will be very different for a timeframe of one year than for some time over the next millennium. With this understanding, timeframe is surely another dimension of risk. 3. Because of the multidimensional character of risk, there is no strictly objective way to represent it as a single number. Of course, there are computational ways to condense a multidimensional entity into a single number, but this happens only by assigning some weighting to how the dimension magnitudes will be combined. Any weighting scheme, even equal weighting of all dimensions, entails judgment. Although such judgment can be informed by relevant expertise, no weighting scheme should claim the purity of mathematical objectivity. 4. Ranking risks is an exercise in judgment. If risks could be objectively represented by a single number, then ranking would be straightforward. But because subjectivity, no matter how rational it may be, is necessary to convert a risk estimate into a number that can be ranked, judgment is necessary. 5. What is important to those affected will influence how they rate risks. Personal perspectives will inevitably play a role in how any individual judges risks. Risk science has been dominated by debates about real versus perceived risk, yet all risk
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predictions involve judgments. Claims to know the “real risk” cannot withstand scrutiny. The focus on risk debates needs to be about how much evidence there is, and how rational and robust the estimation methods are from one risk assessor to the next. 6. Risks are inherently a prediction of what may happen. If something has already happened, there are consequences, but the probability element and timeframes fundamental to risk no longer apply. A mature understanding of the vagaries of prediction should make anyone cautious about claiming to know the “real risks.” Consequences can be real, but the likelihood of those consequences arising must be a prediction — an estimate conditioned by the knowledge available to the person or persons assessing the risk. 7. To varying degrees, risks are balanced by benefits. The negative and positive consequences of any risk are not likely to be evenly distributed among those affected. These realities mean that concerns about fairness and equity are often more influential in judging risks than the probability or magnitude of consequences. 8. Zero risk is not possible. If we can agree that, at a minimum, risk has dimensions of consequences, probability, and time, we need to recognize that each has an enormous range of values that often can only be discussed by representing numerical estimates on a log scale. There is no zero on a log scale or on a mathematically conceived probability
SPRING 2017 PEG | 5
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