Archives For Risk

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

We are hectored on an almost daily basis as to the imminent threat of islamic extremism and how we must respond firmly to this real and present danger. Indeed we have proceeded far enough along the escalation of response ladder that this, presumably existential threat, is now being used to justify talk of internment without trial. So what is the probability that if you were murdered, the murderer would be an immigrant terrorist?

In NSW in 2014 there were 86 homicides, of these 1 was directly related to the act of a islamist terrorist (1). So there’s a 1 in 86 chance that in that year if you were murdered it was at the hands of a mentally disturbed asylum seeker (2). Hmm sounds risky, but is it? Well not really, there was approximately 2.5 million people in NSW in 2014 so the likelihood of being murdered (in that year) is in the first instance 3.44e-5. If we multiply this by the likelihood that it was at the hands of a `terrorist’ then we end up with 4e-7 or 4 chances in 10 million. If we consider subsequent and prior years where nothing happened that likelihood becomes even smaller.

Yet based on this 4 in 10 million chance for one year the NSW government intends to build a super-max 2 prison in NSW, and fill it with ‘terrorists’ while the Federal government enacts more anti-terrorism laws that take us down the road to the surveillance state, if we’re not already there yet. The glaring difference between the perception of risk and the actuality is one that our political class seem oblivious to (3).


1. One death during the Lindt chocolate siege that could be directly attributed to the `terrorist’.

2. Sought and granted in 2001 by the Liberal National Party government.

3. An action that also ignores the role of prisons in converting inmates to Islam as a route to recruiting their criminal, anti-social and violent sub-populations in the service of Sunni extremists.

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.  🙂