1. Sept 4, 2006Risk and Public Policy Defining Risk BUSH 689.601 September 4, 2006

2. Sept 4, 2006Risk and Public Policy Hazard “What are we worried about?” Transmission “How does the hazard get to people” Impact “What does it do to people other things we care about?” Risk Management “What can we do about it?” MechanismDose and Exposure Dose and Response Design institutions (sanctions and incentives) DurationPathwaysDifferential Effects Manage exposure Maximum effect ScopeUncertaintyEstablish norms Components of Risk Assessment

3. Sept 4, 2006Risk and Public Policy What is Risk? The classical answer Risk = uncertainty + damage Risk =, where a hazard is a source of danger s i is a scenario i which leads to some outcome p i is the probability or frequency of the occurrence of scenario i x i is the level of damage that results from the occurrence of s i So Risk={ } over all i.

4. Sept 4, 2006Risk and Public Policy The Risk Curve

5. Sept 4, 2006Risk and Public Policy Classic Form of the Risk Curve

6. Sept 4, 2006Risk and Public Policy Example of Risk Curve Comparisons

7. Sept 4, 2006Risk and Public Policy Risk Curve Densities

8. Sept 4, 2006Risk and Public Policy Bayesian Updating p(Ф m /E) = p(Ф m )  where p(Ф m /E) is your posterior probability of believing Ф m, given the new evidence E;  p(Ф m ) is your “prior”;  p(E/ Ф m ) is the likelihood that you’d have gotten evidence E if Ф m was true;  and p(E) is the probability of the evidence (how compelling is it?).