About indirect, complex and undesired events

Authors:

  • Hannes Sonnsjö
  • Malin Mobjörk

Publish date: 2013-04-05

Report number: FOI-R--3649--SE

Pages: 73

Written in: Swedish

Keywords:

  • risk analysis
  • risk assessment
  • risk perception
  • complex risks
  • emerging risks
  • systemic risks
  • epistemic risks
  • black swans

Abstract

There are different types of risks and some of these, due to their increased complexity, challenge the traditional risk assessment with its focus on probability and consequence. A first step in order to better manage and cope with these complex risks is to understand that they do not comprise a homogenous set of risks. Instead they require deeper knowledge on a broad set of events. The overall aim of this report is therefore, on the basis of a number of studies, to discuss the traits that characterize complex risks as well as to present and discuss some of the more important notions that occur throughout the literature when talking about these types of risks. Even though closely interlinked there are, broadly speaking, two themes or challenges covered in this study regarding how complex risks may be discussed. On one hand, it relates to our inability to acquire new knowledge, which in turn can be traced down to the characteristics of these risks, namely; complexity, i.e. the non-linear relationship between cause and effect: scientific uncertainty, i.e. flaws in models or data access: and socio-political ambiguity, i.e. levels of risk tolerance among different social groups and societal norms regarding risks. On the other hand, complex risks pose challenges in relation to our cognitive ability, or more specifically on individual risk perception and values. In order to understand an increasingly complex world, there are a number of mental strategies for creating patterns in a world characterized by randomness. These strategies can however lead to erroneous conclusions when for example a limited amount of data is seen as representative for a larger phenomenon. This becomes particularly important since much of the work on the identification of complex risks is based on expert assessments, which in turn could be plagued by interpretations and subjectivity. There are a number of concepts surrounding complex risks, which is the general term used for the risks discussed in this study. A common notion is emerging risk which is characterized by an almost complete lack of historical data regarding an event. Due to this lack of data, the probability assessment, as well as the impact assessment, becomes increasingly hard to conduct. It also implies that the need for interpretation becomes larger which opens up for the influence of individual perspectives and values in risk assessment. Closely related to this is the notion of systemic risks, which mainly involves risks whose effects spread across systems due to the complex interdependencies that has emerged, particularly in an increasingly globalised economy. A third type of risk, which is also linked to emerging risks, is the so-called epistemic risk which is grounded in the way individuals form their understanding of a complex world. This becomes especially challenging in the cases of rare events (high impact, low probability events) or due to the phenomenon that is known as black swans. Identification of complex risks illustrates several challenges. This study, however, argues that improved understandings of individuals risk perception as well as of psychological and cognitive barriers are important contributions to the development of a more comprehensive methodology of risk assessment.