Archives For Risk

What is risk, how dow we categorise it and deal with it.

Black Saturday fires (Image source: ABC)

With the NSW Rural Fire Service fighting more than 50 fires across the state and the unprecedented hellish conditions set to deteriorate even further with the arrival of strong winds the question of the day is, exactly how bad could this get? The answer is unfortunately, a whole lot worse. That’s because we have difficulty as human beings in thinking about and dealing with extreme events… To quote from a post I wrote in the aftermath of the 2009 Victorian Black Saturday fires.

So how unthinkable could it get? The likelihood of a fire versus it’s severity can be credibly modelled as a power law a particular type of heavy tailed distribution (Clauset et al. 2007). This means that extreme events in the tail of the distribution are far more likely than predicted by a gaussian (the classic bell curve) distribution. So while a mega fire ten times the size of the Black Saturday fires is far less likely it is not completely improbable as our intuitive availability heuristic would indicate. In fact it’s much worse than we might think, in heavy tail distributions you need to apply what’s called the mean excess heuristic which really translates to the next worst event is almost always going to be much worse…

So how did we get to this?  Well simply put the extreme weather we’ve been experiencing is a tangible, current day effect of climate change. Climate change is not something we can leave to our children to really worry about, it’s happening now. That half a degree rise in global temperature? Well it turns out it supercharges the heavy tail of bushfire severity. Putting it even more simply it look’s like we’ve been twisting the dragon’s tail and now it’s woken up…

Matrix (Image source: The Matrix film)

How algorithm can kill…

So apparently the Australian Government has been buying it’s software from Cyberdyne Systems, or at least you’d be forgiven for thinking so given the brutal (dare I say inhumane) treatment Centerlink’s autonomous debt recovery software has been handing out to welfare recipients who ‘it’ believes have been rorting the system. Yep, you heard right it’s a completely automated compliance operation (well at least the issuing part).  Continue Reading…

Donald Trump

Image source: AP/LM Otero

A Trump presidency in the wings who’d have thought! And what a total shock it was to all those pollsters, commentators and apparatchiks who are now trying to explain why they got it so wrong. All of which is a textbook example of what students of risk theory call a Black Swan event. Continue Reading…

Matrix (Image source: The Matrix film)

A reader of this blog might be aware of both the difference between ergodic and non-ergodic risks, and how the presence of non-ergodicity (i.e. the possibility of irreversible catastrophic outcomes) undermines a key assumption on which Pascalian risk assessment is based. But what to do about it? Well one thing we can practically do is to ensure that when we assess risk we take into account the non-ergodic nature of such catastrophes.  Continue Reading…

Anna Johnson on boycotting the census

M1 Risk_Spectrum_redux

A short article on (you guessed it) risk, uncertainty and unpleasant surprises for the 25th Anniversary issue of the UK SCS Club’s Newsletter, in which I introduce a unified theory of risk management that brings together aleatory, epistemic and ontological risk management and formalises the Rumsfeld four quadrant risk model which I’ve used for a while as a teaching aid.

My thanks once again to Felix Redmill for the opportunity to contribute.  🙂

Monkey-typing

Safety cases and that room full of monkeys

Back in 1943, the French mathematician Émile Borel published a book titled Les probabilités et la vie, in which he stated what has come to be called Borel’s law which can be paraphrased as, “Events with a sufficiently small probability never occur.” Continue Reading…