Enhanced descriptions from Syndetics:

Everyday we face decisions that carry an element of risk and uncertainty. The ability to analyse, communicate and control the level of risk entailed by these decisions remains one of the most pressing challenges to the analyst, scientist and manager. This book presents the foundational issues in risk analysis - expressing risk, understanding what risk means, building risk models, addressing uncertainty, and applying probability models to real problems. The principal aim of the book is to give the reader the knowledge and basic thinking they require to approach risk and uncertainty to support decision making.
* Presents a statistical framework for dealing with risk and uncertainty.
* Includes detailed coverage of building and applying risk models and methods.
* Offers new perspectives on risk, risk assessment and the use of parametric probability models.
* Highlights a number of applications from business and industry.
* Adopts a conceptual approach based on elementary probability calculus and statistical theory.
Foundations of Risk Analysis provides a framework for understanding, conducting and using risk analysis suitable for advanced undergraduates, graduates, analysts and researchers from statistics, engineering, finance, medicine and the physical sciences, as well as for managers facing decision making problems involving risk and uncertainty.

Table of contents provided by Syndetics

• Preface (p. ix)
• 1 Introduction (p. 1)
• 1.1 The Importance of Risk and Uncertainty Assessments (p. 1)
• 1.2 The Need to Develop a Proper Risk Analysis Framework (p. 4)
• Bibliographic Notes (p. 6)
• 2 Common Thinking about Risk and Risk Analysis (p. 7)
• 2.1 Accident Risk (p. 7)
• 2.1.1 Accident Statistics (p. 7)
• 2.1.2 Risk Analysis (p. 11)
• 2.1.3 Reliability Analysis (p. 24)
• 2.2 Economic Risk (p. 28)
• 2.2.1 General Definitions of Economic Risk in Business and Project Management (p. 28)
• 2.2.2 A Cost Risk Analysis (p. 30)
• 2.2.3 Finance and Portfolio Theory (p. 31)
• 2.2.4 Treatment of Risk in Project Discounted Cash Flow Analysis (p. 34)
• 2.3 Discussion and Conclusions (p. 36)
• 2.3.1 The Classical Approach (p. 36)
• 2.3.2 The Bayesian Paradigm (p. 37)
• 2.3.3 Economic Risk and Rational Decision-Making (p. 39)
• 2.3.4 Other Perspectives and Applications (p. 40)
• 2.3.5 Conclusions (p. 42)
• Bibliographic Notes (p. 43)
• 3 How to Think about Risk and Risk Analysis (p. 47)
• 3.1 Basic Ideas and Principles (p. 47)
• 3.1.1 Background Information (p. 50)
• 3.1.2 Models and Simplifications in Probability Considerations (p. 51)
• 3.1.3 Observable Quantities (p. 51)
• 3.2 Economic Risk (p. 52)
• 3.2.1 A Simple Cost Risk Example (p. 52)
• 3.2.2 Production Risk (p. 55)
• 3.2.3 Business and Project Management (p. 57)
• 3.2.4 Investing Money in a Stock Market (p. 58)
• 3.2.5 Discounted Cash Flow Analysis (p. 59)
• 3.3 Accident Risk (p. 60)
• Bibliographic Notes (p. 62)
• 4 How to Assess Uncertainties and Specify Probabilities (p. 63)
• 4.1 What Is a Good Probability Assignment? (p. 64)
• 4.1.1 Criteria for Evaluating Probabilities (p. 64)
• 4.1.2 Heuristics and Biases (p. 66)
• 4.1.3 Evaluation of the Assessors (p. 67)
• 4.1.4 Standardization and Consensus (p. 68)
• 4.2 Modelling (p. 68)
• 4.2.1 Examples of Models (p. 69)
• 4.2.2 Discussion (p. 70)
• 4.3 Assessing Uncertainty of Y (p. 71)
• 4.3.1 Assignments Based on Classical Statistical Methods (p. 72)
• 4.3.2 Analyst Judgements Using All Sources of Information (p. 73)
• 4.3.3 Formal Expert Elicitation (p. 74)
• 4.3.4 Bayesian Analysis (p. 75)
• 4.4 Uncertainty Assessments of a Vector X (p. 83)
• 4.4.1 Cost Risk (p. 83)
• 4.4.2 Production Risk (p. 85)
• 4.4.3 Reliability Analysis (p. 86)
• 4.5 Discussion and Conclusions (p. 90)
• Bibliographic Notes (p. 92)
• 5 How to Use Risk Analysis to Support Decision-Making (p. 95)
• 5.1 What Is a Good Decision? (p. 96)
• 5.1.1 Features of a Decision-Making Model (p. 97)
• 5.1.2 Decision-Support Tools (p. 98)
• 5.1.3 Discussion (p. 103)
• 5.2 Some Examples (p. 106)
• 5.2.1 Accident Risk (p. 106)
• 5.2.2 Scrap in Place or Complete Removal of Plant (p. 108)
• 5.2.3 Production System (p. 113)
• 5.2.4 Reliability Target (p. 114)
• 5.2.5 Health Risk (p. 116)
• 5.2.6 Warranties (p. 119)
• 5.2.7 Offshore Development Project (p. 120)
• 5.2.8 Risk Assessment: National Sector (p. 122)
• 5.2.9 Multi-Attribute Utility Example (p. 124)
• 5.3 Risk Problem Classification Schemes (p. 127)
• 5.3.1 A Scheme Based on Potential Consequences and Uncertainties (p. 127)
• 5.3.2 A Scheme Based on Closeness to Hazard and Level of Authority (p. 131)
• Bibliographic Notes (p. 142)
• 6 Summary and Conclusions (p. 145)
• Appendix A Basic Theory of Probability and Statistics (p. 149)
• A.1 Probability Theory (p. 149)
• A.1.1 Types of Probabilities (p. 149)
• A.1.2 Probability Rules (p. 151)
• A.1.3 Random Quantities (Random Variables) (p. 155)
• A.1.4 Some Common Discrete Probability Distributions (Models) (p. 159)
• A.1.5 Some Common Continuous Distributions (Models) (p. 160)
• A.1.6 Some Remarks on Probability Models and Their Parameters (p. 164)
• A.1.7 Random Processes (p. 165)
• A.2 Classical Statistical Inference (p. 166)
• A.2.1 Non-Parametric Estimation (p. 166)
• A.2.2 Estimation of Distribution Parameters (p. 167)
• A.2.3 Testing Hypotheses (p. 169)
• A.2.4 Regression (p. 170)
• A.3 Bayesian Inference (p. 171)
• A.3.1 Statistical (Bayesian) Decision Analysis (p. 173)
• Bibliographic Notes (p. 174)
• Appendix B Terminology (p. 175)
• Bibliography (p. 179)
• Index (p. 187)

Reviews provided by Syndetics

CHOICE Review

Every decision taken by an individual or an organization always carries with it an element of risk and uncertainty, about this book provides guidance and recommendations. To function efficiently and effectively in this complex world, it is of utmost importance for every researcher, manager, scientist, and individual engaged in decision making to gain deeper understanding of risk and how to control it. Aven (Univ. of Stavanger, Norway) provides a statistical framework for handling uncertainty and risk, building risk models, and addressing uncertainty and risk assessment. Six chapters present brief comments on the importance of risk and uncertainty assessments; basic ideas, common concepts, models, and methods for later use for risk and risk analysis; a unified approach based on the idea that risk is associated with uncertainty; problems of assessing uncertainties and specifying probabilities in various situations; how to use risk analysis in decision-making; and good principles and methods for action. Readers need knowledge of basic probability theory and statistical inference. Useful chapter bibliographic notes; appendixes with material on basic probability theory, statistical inference, and terminology. An excellent book--interesting, informative, and readable. ^BSumming Up: Highly recommended. Upper-division undergraduates through professionals. D. V. Chopra Wichita State University