High-Risk Decisions When Probabilities Are Unknown (or Irrelevant)

High-risk exposures, those with the potential to destroy or seriously impair an individual, business or society, are our greatest ‘risk management’ concern. Yet when it comes to such rare, high-impact events, probability information is scarce, and may ultimately be useless as a guide to action. In this paper, we review the appropriateness of probability-based techniques, primary expected value decision-making, for the management of high-risk exposures. The conclusion is that decision criteria which are more fundamental, yet difficult to apply, are needed when high-risk probabilities are unknown (or irrelevant).