Abstract
This chapter reviews and discusses fundamental issues in risk management, related to concepts, principles and methods used. We start in Section 2.1 by summarising alternative perspectives on risk, including the prevailing perspectives adopted in engineering, economics and social sciences. A basic distinction is made between the classical approach to risk and probability and the Bayesian approach or paradigm. For readers not familiar with this basic distinction, we refer to Appendix A, which gives a detailed review of these two approaches. Section 2.2 gives an overview of some fundamental economic principles, theories and methods of relevance for safety and risk applications. These include the expected utility theory, cost-benefit analyses, cost-effectiveness analyses and the portfolio theory. This section also discussed the concept of risk aversion in safety management.
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Bibliographic Notes
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(2007). Risk Management Principles and Methods — Review and Discussion. In: Risk Management. Springer Series in Reliability Engineering. Springer, London. https://doi.org/10.1007/978-1-84628-653-7_2
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DOI: https://doi.org/10.1007/978-1-84628-653-7_2
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