ACCEPTABILITY

OF RISK

RISK
DEFINITION: Risk is a compound measure of the probability and magnitude of adverse effect Risk has two components likelihood of the harm x magnitude of harm

Is this risk?

Then what we call this as?

Can u spot this?

THE EMPIRE STATE

BUILDING
Construction started in 1929 Opened on May 1, 1931 443 m above street level Nearly 102 storeys

On 28 July 1945
A twin engine U.S. Army B-25 bomber lost in fog and crashed on the building

Only 13 were killed and the building was repaired

The World Trade Center

Opened in 1973 116 storeys 1362 feet above street level

9/11 TERRORIST ATTACK

WTC GROUND ZERO

UTILITARIANISM AND ACCEPTABLE RISK

ACCEPTABLE RISK
A risk is said to be acceptable when the product of the probability and the magnitude of the harm is equalled or exceeded by the product of probability and the magnitude of benefit

Risky Situations and Acceptable risk

Which is acceptable

Which is acceptable?

1.Buying a car from a dependable person

2.Buying a car from a unknown person

Which is acceptable?

RISK(COST)BENEFIT ANALYSIS

INNOVATIONS AND RISK

EXAMPLE
Consider u are going to play CASINO and ur bet is $3000

a) 100% chance of losing nothing

b) 75% chance of receiving $4000

but a 25% chance of receiving 10%less

EXAMPLE(cont.)
c) 95% chance of losing $3000 and 5% chance of getting $10000 d)50% chance of losing everything and a 50%chance of losing nothing