Analytical pork barreling?

Kevin John McAneney

    Research output: Chapter in Book/Report/Conference proceedingOther chapter contribution

    Abstract

    Political decision-making often takes place in a soup of risk, uncertainty and conflicting expert opinion and inadequate information. This is not because of political failure but because of the inherent complexity of such decisions and the absence of complete information. In recent times, significant efforts have been devoted to quantifying the impact of natural hazards on communities. A preferred approach to risk-informed decision-making aims to exploit an ensemble of hazard-related exceedance probability (EP) curves. EP curves are commonly used by the insurance industry to price reinsurance contracts. But does the use of these tools improve our decision-making? Catastrophe insurance is an example where there is a clear market need, a regulatory requirement and mostly, but not always, a sophisticated understanding of risk as a financial liability. These EP curves tell us, within the limits and constraints of data inputs, the probability of the modelled loss exceeding a given amount. Impediments to extending this tool beyond insurance are complicated by the extreme skewness of the EP curves and, by inference, the skewness of any cost-benefit analysis that depends upon it. Using examples from natural hazards, bio-security and terrorism, this paper will consider these issues as well as complications of risk perception and other decision biases and the role of market mechanisms.
    Original languageEnglish
    Title of host publicationAustralian Earth Sciences Convention
    Subtitle of host publication2-6 July 2006, Melbourne Convention and Exhibition Centre : convention handbook
    EditorsDavid Debnam
    Place of PublicationOsborne Park, WA
    PublisherRESolutions Resource & Energy Services
    Pages72-73
    Number of pages2
    ISBN (Print)0646462466
    Publication statusPublished - 2006
    EventAustralian Earth Sciences Convention - Melbourne
    Duration: 2 Jul 20066 Jul 2006

    Publication series

    NameAbstracts (Geological Society of Australia)
    PublisherRESolutions Resource & Energy Services
    Number82
    ISSN (Print)0729-011X

    Conference

    ConferenceAustralian Earth Sciences Convention
    CityMelbourne
    Period2/07/066/07/06

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