Uncertainties in risk analysis: Six levels of treatment

Abstract

This paper examines different levels of analytical sophistication in the treatment of uncertainties in risk analysis, and the possibility of transfer of experience across fields of application. First, this paper describes deterministic and probabilistic methods of treatment of risk and uncertainties, and the different viewpoints that shape these analyses. Second, six different levels of treatment of uncertainty are presented and discussed in the light of the evolution of the risk management philosophy in the US. Because an in-depth treatment of uncertainties can be complex and costly, this paper then discusses when and why a full (two-tier) uncertainty analysis is justified. In the treatment of epistemic uncertainty, an unavoidable and difficult problem is the encoding of probability distributions based on scientific evidence and expert judgments. The last sections include a description of different approaches to the aggregation of expert opinions and their use in risk analysis, and a recent example of methodology and application (in seismic hazard analysis) that can be transferred to other domains.