You have to listen to the people who have a negative opinion
as well as those who have positive opinion. Just to make sure
that you are blending all these opinions in your mind before a
decision is made.
Carlos Ghosn
It is difficult to take decisions concerning infrastructure with complete certainty
relating to the inputs or assumptions and about the outcome. In the presence of
partial, imperfect or uncertain future conditions, decision theory provides a sensible
strategy, comprising four steps (1) to list all the feasible alternatives (2) to establish
the expected future events (3) to construct a payoff table (4) to select optimum
decision criterion, followed by selecting a criterion which results in the largest
payoff to the decision maker or to the infrastructure supplier. Decisions are taken
under three varieties of environments: (a) decision making under conditions of
certainty (b) decision making under conditions of uncertainty, where the decision
maker does not have enough data or knowledge to permit him set probabilities to the
different states of nature (c) Decision making under conditions of risk, where the
decision maker possesses enough information to permit him assign probabilities to
any of possible states of nature. This chapter presents a few examples showing the
application of the different criteria that may be used.
16.1 Risk Assessment and Management
16.1.1 Introduction
Risk is an abstract concept. It is difficult to define and in most cases impossible to
measure with any precision. In general, however, there are two main constituents in
any definition of risk:
(i) Uncertainty and
(ii) Undesired consequences.
Risk and uncertainty characterise situations where the actual outcome for a
particular activity is likely to deviate from the estimate or forecast value.
16.1.2 Risk
People cannot control all events, and some of them have unwanted or negative
impacts on the individual such as injury or sickness. At other times, the impacts
affect the community, for example through natural disasters (cyclones, floods, etc.),
442
16 Decision Taking with Infrastructure
as well as those who have positive opinion. Just to make sure
that you are blending all these opinions in your mind before a
decision is made.
Carlos Ghosn
It is difficult to take decisions concerning infrastructure with complete certainty
relating to the inputs or assumptions and about the outcome. In the presence of
partial, imperfect or uncertain future conditions, decision theory provides a sensible
strategy, comprising four steps (1) to list all the feasible alternatives (2) to establish
the expected future events (3) to construct a payoff table (4) to select optimum
decision criterion, followed by selecting a criterion which results in the largest
payoff to the decision maker or to the infrastructure supplier. Decisions are taken
under three varieties of environments: (a) decision making under conditions of
certainty (b) decision making under conditions of uncertainty, where the decision
maker does not have enough data or knowledge to permit him set probabilities to the
different states of nature (c) Decision making under conditions of risk, where the
decision maker possesses enough information to permit him assign probabilities to
any of possible states of nature. This chapter presents a few examples showing the
application of the different criteria that may be used.
16.1 Risk Assessment and Management
16.1.1 Introduction
Risk is an abstract concept. It is difficult to define and in most cases impossible to
measure with any precision. In general, however, there are two main constituents in
any definition of risk:
(i) Uncertainty and
(ii) Undesired consequences.
Risk and uncertainty characterise situations where the actual outcome for a
particular activity is likely to deviate from the estimate or forecast value.
16.1.2 Risk
People cannot control all events, and some of them have unwanted or negative
impacts on the individual such as injury or sickness. At other times, the impacts
affect the community, for example through natural disasters (cyclones, floods, etc.),
442
16 Decision Taking with Infrastructure