Is there a perfect model of risk?

Résumé du document

Building on the assumption that there is, indeed, no such thing as a perfect model of risk, this study will first provide a manifold explanation for that matter.
Subsequently, while assuming the possible existence of such a perfect model of risk, it will question its value as regards to the politicization of modern societies, before ultimately recommending some guidelines to improve the current risk assessment methods, the further elaboration of which could undoubtedly contribute to offset some of the current risk modelling methods' shortages.

The impossibility of establishing a perfect model of risk is closely linked to inherent characteristics of the notion of risk itself.

Since risk avoidance became one of our modern society's biggest preoccupations, the notion of risk has been scrutinized by a significant number of academics, whose primary goal was to find an "analytical fix" to the risk issue.

Soon enough, while scholars realized that there was no clear definition of risk, the idea of establishing a perfect model of risk became a challenge. One of the peculiarities of the notion lays indeed on the fact that it is likely to be interpreted in numerous ways.

Extraits

[...] Mathematics, the failure to fully grasp the “risk reality” If at all risk was considered by some academics as “graspable” and intelligible, they would certainly still be unable to build a perfect model of risk. Because “both risk models and econometric models, as complex as they have become, are still too simple to capture the full array of governing variables that drive global economic reality” and because model, of necessity, is an abstraction from the full detail of the real world”[7]. [...]

[...] Stirling, op. cit., p “Based on the best available scientific and technical data, combined with empirically-grounded weighting schemes for prioritizing the different incommensurable dimensions involved, straightforward multi-criteria techniques may be used to generate ‘political sensitivity maps'. These would provide a transparent display, both to decision makers and other interested and affected parties, of the political and ethical implications of different decisions, without seeking to order these in terms of their ‘rationality'”. Stirling, op. cit., p Pointing out blindness with respect to randomness, particularly large deviations”, Nassim Nicholas Taleb explains that a “Black Swan” is an event with the following three attributes. [...]

[...] Accordingly, academics in line with this assessment detailed several dimensions of risk such as: “their severity (e.g. the balance of morbidity to mortality); their immediacy (e.g. injury versus disease), their duration, reversibility, familiarity or controllability, their geographic or demographic distribution and their ‘gravity' (whether they are concentrated in single serious episodes or spread over a number of relatively minor events)”[3]. The accuracy of those scholars laying the emphasis on their incapacity to appoint any level of significance to any of the dimensions of risk they distinguished[4] is quite telling about the way this multifaceted notion is currently perceived. [...]

[...] Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable” As the author adds small number of Black Swans explains almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives”. Nassim Nicholas, Taleb, Black Swan: The Impact of the Highly Improbable”, NY Times April 2007. “Black Swan theory”, Wikipedia, retrieved 1 April 2011, http://en.wikipedia.org/wiki/Black_swan_theory#cite_note-0. [...]

[...] will never have a perfect model of risk Alan Greenspan Is there a perfect model of risk? Building on the assumption that there is, indeed, no such thing as a perfect model of risk, this study will first provide a manifold explanation for that matter. Subsequently, while assuming the possible existence of such a perfect model of risk, it will question its value as regards to the politicization of modern societies, before ultimately recommending some guidelines to improve the current risk assessment methods, the further elaboration of which could undoubtedly contribute to offset some of the current risk modelling methods' shortages Indeed, We will never have a perfect model of risk There is no clear definition of risk The impossibility of establishing a perfect model of risk is closely linked to inherent characteristics of the notion of risk itself. [...]