Advances in Risk Management

223

0.0%

0.3%

0.8%

0.5%

1.0%

1.3%

1.6%

1.8%

2.1%

2.3%

2.6%

2.9%

3.1%

3.4%

3.6%

3.9%

4.2%

4.4%

4.7%

4.9%

5.2%

5.5%

5.7%

6.0%

6.3%

6.5%

6.8%

7.0%

7.3%

7.6%

7.8%

8.1%

8.3%

8.6%

8.9%

9.1%

9.4%

9.6%

9.9%

Proportion of failures (POF)

160 140 120 100
Probability density

80 60 40 20 0

Prior (common)Posterior Model 1Posterior Model 2

Figure 11.1

Prior and posterior distribution of the POF