cancer due to cigarette smoking, the chance of succeeding in developing a vaccine against the
HIV virus in 2007, the likelihood of getting a “Royal Flush” in a Poker game and the
probability of a major earthquake occurring in the Bay area of San Francisco within the next
decade.
Even though it may be understandable from the context of discussion what is meant by the
different words it is necessary in the context of engineering decision making to be precise in
the understanding of risk. Risk is to be understood as the expected consequences associated
with a given activity, the activity being e.g. the construction, operation and decommissioning
of a power plant.
Considering an activity with only one event with potential consequences C the risk R is the
probability that this event will occur P multiplied with the consequences given the event
occurs i.e.:
RPC (1.1)If e.g. nevents with consequences and occurrence probabilities may result from the
activity the total risk associated with the activity is simply assessed through the sum of the
risks from the individual events, i.e.:
Ci Pi1n
ii
iR PC
(1.2)
This definition of risk is consistent with the interpretation of risk used e.g. in the insurance
industry and risk may e.g. be given in terms of Euros, Dollars or the number of human
fatalities. Even though most risk assessments have some focus on the possible negative
consequences of events the definitions in Equations (1.1)-(1.2) is also valid in the case where
benefits are taken into account. In fact and as will be elaborated in lecture 4 in this case the
definition in Equations (1.1)-(1.2) is more general and consistent with expected utility utilized
as basis for decision analysis.
1.4 The Risk-Based Decision Process
Risk analysis may be represented in a generic format, which is largely independent of the
application, e.g. independent of whether the risk analysis is performed to document that the
risks associated with a given activity are acceptable or whether the risk analysis is performed
to serve as a basis of a management decision.
In Figure 1.5 a flow chart based on the Australian New Zealandic code 4369 (1995), which
has also been followed by many other countries, is shown for a generic representation of risk
analysis. In the following the individual steps in the flow chart will be briefly described
following Stewart and Melchers (1997).
Define Context
A very important step in the process of a risk analysis is to identify and/or to clarify the
context of the decision problem, i.e. the relation between the considered engineering system