Risk-as-Pleasure
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For instance, an extremely disturbing event that all participants wish
not to happen again may be ignored in analysis despite the fact it has occurred
and has a nonzero probability. Or, an event that everyone agrees is inevitable
may be ruled out of analysis due to greed or an unwillingness to admit that it is
believed to be inevitable. These human tendencies to error and wishful thinking
often affect even the most rigorous applications of the scientific method and are
a major concern of the philosophy of science.
But all decision-making under uncertainty must consider cognitive bias,
cultural bias, and notational bias. No group of people assessing risk is immune
to “groupthink”: acceptance of obviously wrong answers simply because it is
socially painful to disagree.
One effective way to solve framing problems in risk assessment or
measurement (although some argue that risk cannot be measured, only assessed)
is to ensure that scenarios, as a strict rule, must include unpopular and perhaps
unbelievable (to the group) high-impact low-probability “threat” and/or “vision”
events.
This permits participants in risk assessment to raise others’ fears or
personal ideals by way of completeness, without others concluding that they
have done so for any reason other than satisfying this formal requirement.
For example, an intelligence analyst with a scenario for an attack by
hijacking might have been able to insert mitigation for this threat into the U.S.
budget. It would be admitted as a formal risk with a nominal low probability.
This would permit coping with threats even though the threats were dismissed
by the analysts’ superiors. Even small investments in diligence on this matter
might have disrupted or prevented the attack, or at least “hedged” against the
risk that an administration might be mistaken.
Insurance
Although military decision-making tends to dominate risk theory, its
most sophisticated daily practice is in the insurance industry. The insurers have
well-defined roles of actuary, underwriter, agent, auditor, and adjustor. Each of
these is an assessor in somewhat different circumstances or stages of the
insuring, reinsuring, adjustment, recovery, and claims payment processes.
MUitary Leads Insurance Leads Finance Leads Government
In very broad terms, military and insurance decision-making is quite a
bit more formal and sophisticated than equivalent processes in financial markets;
regret theory has done much to equalize this by incorporating many common
military and insurance practices and putting formal trappings on them.
Generally, the military, insurance, financial, and other professional
fields must work through methods before they become prevalent in government
policy. Risk assessments with differing ways of determining public concerns are