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jerryking : frequency_and_severity   13

We need to be better at predicting bad outcomes
September 2019 | Financial Times | by Tim Harford.

A question some of us ask all too often, and some of us not often enough: what if it all [jk: our plan] goes wrong?.....we don’t think about worst-case scenarios in the right way......
The first problem is that our sense of risk is pretty crude. The great psychologist Amos Tversky joked that most of us have three categories when thinking about probabilities: “gonna happen”, “not gonna happen” and “maybe”.....It would be helpful if our sense of risk was a little more refined; intuitively, it is hard to grasp the difference between a risk of one in a billion and that of one in a thousand. Yet, for a gambler — or someone in the closely related business of insurance — there is all the difference in the world.....research by Barbara Mellers, Philip Tetlock and Hal Arkes suggests that making a serious attempt to put probabilities on uncertain future events might help us in other ways: the process makes us more humble, more moderate and better able to discern shades of grey. Trying to forecast is about more than a successful prediction......we can become sidetracked by the question of whether the worst case is likely. Rather than asking “will this happen?”, we should ask “what would we do if it did?”

The phrase “worst-case scenario” probably leads us astray: anyone can dream up nightmare scenarios.....To help us think sensibly about these worst-case possibilities, Gary Klein, psychologist and author of Seeing What Others Don’t, has argued for conducting “pre-mortems” — or hypothetical postmortems. Before embarking on a project, imagine receiving a message from the future: the project failed, and spectacularly. Now ask yourself: why? Risks and snares will quickly suggest themselves — often risks that can be anticipated and prevented.......Contingency planning is not always easy......woes that would result both as the “base case” (the truth) and a “worst-case scenario” (the government sucking in its stomach while posing for a selfie).
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In our increasingly airbrushed world, it becomes ever more necessary to ask the unfashionable questions like ‘what could possibly go wrong?’ - and then plan for it...
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Humanity's survival may well rely on the ability of our imaginations to explore alternative futures in order to begin building the communities that can forestall or endure worst-case catastrophes.
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Amos_Tversky  anticipating  base_rates  beforemath  books  contingency_planning  discernment  failure  forecasting  foresight  frequency_and_severity  humility  nuanced  predictions  preparation  probabilities  risk-assessment  risks  Tim_Harford  uncertainty  worst-case 
september 2019 by jerryking
Why we find it hard to imagine and plan for worst-case scenarios
SEPTEMBER 14, 2017 | The Globe and Mail | WENCY LEUNG.

When it comes to facing the risks of large-scale disasters, whether it’s the threat of nuclear war, a terror attack, a hurricane or raging wildfire, many people have a hard time envisioning – let alone preparing for – worst-case scenarios.

"grab-and-go" bag:

water, space blankets, flashlights and batteries, a hand-crank radio with a charger for her cellphone, a stash of garbage bags ("They can be used for keeping people warm as well, by cutting holes for the heads," she says), first-aid kits, a spare pair of glasses, food packages, waterproof matches, an extra supply of her husband's medication, hygiene products (deodorant, wet wipes, hand sanitizer, toilet liners, dental floss, toothbrush, toothpaste), tissues and two decks of cards..... a rope, a shovel and two or three blankets in the car......When it comes to facing the risks of large-scale disasters, whether it's the threat of nuclear war, a terror attack, a hurricane or raging wildfire, many people have a hard time envisioning – let alone preparing for – worst-case scenarios......New Yorker journalist Kathryn Schulz writes in her Pulitzer Prize-winning feature on the likelihood of a large-scale Cascadia earthquake. "Where we stumble is in conjuring up grim futures in a way that helps to avert them." .....research on the evacuation of the World Trade Center in New York on Sept. 11, 2001....workers were concerned about leaving without the approval of their bosses.....delayed vacating the buildings to attend to last-minute tasks, such as gathering their personal items, making phone calls or shutting down their computers,.....people want to make a decision as a group, and then if some people can't join a group, they'll wait for that person, for example."......people can underestimate the danger they face and be overconfident in their ability to overcome it.......In their chapter of Risk Conundrums: Solving Unsolvable Problems...authors Howard Kunreuther, Paul Slovic and Kimberly Olson point out this kind of "availability bias" can make people underestimate the likelihood of a disaster before it occurs, and overestimate it afterward. Such thinking helps explain why people often buy insurance right after a disaster, but then cancel their policies after they've had several loss-free years. It's difficult to convince them that they should celebrate not having suffered any loss and still maintain insurance coverage......Socioeconomic or contextual factors, which include the level of an individual's trust in institutions, also play a role in how they perceive and react to risk..... there's no one-size-fits-all approach to encouraging the public to prepare for a disaster, he says. Warnings and preparedness efforts would be more effective if they were targeted to specific groups, based on the way they perceive risk.
worst-case  disasters  imagination  frequency_and_severity  9/11  denials  optimism_bias  availability_bias  books  one-size-fits-all  overconfidence  risk-perception  improbables  disaster_preparedness  conundrums  Pulitzer_Prize 
september 2017 by jerryking
Tornado-Ravaged Hospital Took Storm-Smart Approach During Rebuild - Risk & Compliance Journal.
Aug 30, 2017 | WSJ | By Ben DiPietro.

...................“Preparation for what these events can be–and belief they can actually happen–is important so you make sure you are preparing for them,” ....trying to undertake whatever is your organizational mission in the midst of a tornado or other devastating event is much harder, given the high emotions and stress that manifests itself at such moments.

“Understand the possibilities and pre-planning will make that go a lot better,”

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As Hurricane Harvey has shown, extreme weather events can devastate a region’s infrastructure. Hospital operator Mercy had its own experience of this in 2011 when a tornado ripped through Joplin, Mo., killing 161 people and destroying its hospital.

Hospital operator Mercy took the lessons it learned from that tornado experience and incorporated them into the design of the new hospital–and also changed the way it plans and prepares for disasters. The new facility reflects a careful risk assessment, as Mercy took into account not only the physical risk of tornadoes but the risks to power supplies and medical supplies.

“We always prepare, always have drills for emergencies, but you never quite can prepare for losing an entire campus,” ....“Now we are preparing for that…it definitely changed the way we look at emergency management.”

** Protecting What Matters Most **
Mercy took the lessons it learned from that devastating weather event and applied them when it was time to build its latest hospital, which was constructed in a way to better withstand tornadoes while providing more secure systems infrastructure and adding backup systems to ensure operations continued unimpeded, ......Even the way medical supplies were stored was changed; instead of storing supplies in the basement, where they were inaccessible in the immediate aftermath of the tornado, they now are kept on each floor so staff don’t need to go hunting around for things they need during an emergency.....“The first priority is to save lives, the second is to minimize damage to the facility,”

** Focus on the Worst **
many companies worry about low-severity, high-frequency events–those things that happen a lot. They instead need to focus more on high-severity events that can cause a company to impair its resilience. “....identify and work on a worst-case scenario and make sure it is understood and the company is financially prepared for it,”

work with its key vendors and suppliers to know what each will do in the face of a disaster or unexpected disruption. “...large companies [should] know their key vendors prior to any major incidents,” ...“Vendors become partners at that time and you need to know people will do what you need them to do.”

A company needs to assess what is most important to its operations, map who their vendors are in those areas and engage them in various loss scenarios .... It should review its insurance policy language against possible weather events, identify any gaps and either revise policies to fill those holes or to at least make sure executives understand what the risks are of leaving those gaps unattended.
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See also :
What to Do Before Disaster Strikes - WSJ.com ☑
September 27, 2005 | WSJ | By GEORGE ANDERS.
start by cataloging what could go wrong. GM, for example, has created "vulnerability maps" that identify more than 100 hazards, ranging from wind damage to embezzlement. Such maps make it easier for managers to focus on areas of greatest risk or gravest peril.
low_probability  disasters  Hurricane_Harvey  extreme_weather_events  hospitals  tornadoes  design  rebuilding  preparation  emergencies  lessons_learned  worst-case  natural_calamities  anticipating  insurance  vulnerabilities  large_companies  redundancies  business-continuity  thinking_tragically  high-risk  risk-management  isolation  compounded  network_risk  black_swan  beforemath  frequency_and_severity  resilience  improbables  George_Anders  hazards  disaster_preparedness  what_really_matters 
september 2017 by jerryking
Sony needs to stop playing the victim - The Globe and Mail
MIA PEARSON
Special to The Globe and Mail
Published Thursday, Dec. 25 2014

2014 has us [that]...cyber attacks and hacking scandals are now a fact of life.

According to McAfee Labs 2015 Threat Predictions, cyber attacks will grow in frequency and range in 2015, and some experts believe 2015 could be the year a major company goes out of business because it failed to adequately prepare for a cyber attack.

Indeed, how your brand prepares for this new age of corporate cyber-terrorism could define your business....Sony’s real misstep has less to do with its decision to pull – and then subsequently green light – the movie, and more about their lack of leadership in place to handle this kind of situation. The strategy – or rather, lack thereof – conveyed little confidence or resilience to the public....Sony continues to play the victim card, but executives at the company only have themselves to blame for not clearly communicating the reasons for their decisions to the public and holding strong to that strategy.
crisis  crisis_management  data_breaches  hackers  cyberattacks  cyber_security  victimhood  Sony_Pictures  public_relations  Communicating_&_Connecting  threats  missteps  brands  preparation  frequency_and_severity 
december 2014 by jerryking
How to Write a Problem Statement for Six Sigma
By Craig Gygi, Bruce Williams, and Neil DeCarlo
The problem statement serves several purposes in a Six Sigma project. First, it significantly clarifies the current situation by specifically identifying the problem and its severity, location, and financial impact. It also serves as a great communication tool, helping to get buy-in and support from others. When problem statements are well written, people readily grasp and understand what you’re trying to accomplish.

A brief description of the problem and the metric used to describe the problem

Where the problem is occurring by process name and location

The time frame over which the problem has been occurring

The size or magnitude of the problem
problems  problem_solving  Six_Sigma  writing  Communicating_&_Connecting  howto  problem_framing  frequency_and_severity  buy-in  financial_impact 
may 2014 by jerryking
Uniting for Cyberdefense - NYTimes.com
By RENÉ OBERMANN
Published: February 19, 2013

A set of basic and accepted rules-of-the-road protects our physical highways and traffic, and we have to have similar, internationally recognized rules for the information highway. We must define standards and functionalities in order to ensure a safe and coherent digital architecture. A good example is the German security standard for “smart meters” that monitor and bill power consumption.

This will not be easy for the I.T. industry. In Europe, the sheer number of Internet providers makes it difficult to find a common position. Again, transparency and information sharing is essential: Every sound effort to implement such rules and standards relies on feedback about vulnerabilities, as well as data on the quantity, quality and origin of attacks. One cannot manage a problem until one can measure it.
collaboration  cyber_security  defensive_tactics  Deutsche_Telekom  frequency_and_severity  forensics  information_sharing  metrics  network_risk  smart_meters  technical_standards  transparency  vulnerabilities 
february 2013 by jerryking
Buyer demand for recall cover exceeds supply
July 28, 2002 | Business Insurance | Sally Roberts.

Risk managers seeking product recall coverage for food and beverages are finding a market with fewer players, smaller capacity and higher prices. The combination of the soft market and an increase in frequency and severity of product recall losses over the past few years - particularly in the meat and poultry industry - has sent many reinsurers and insurers running from the market. As a result, few underwriters remain, which leaves many food and beverage manufacturers and retailers in need of coverage but unable to find adequate limits and prices.
product_recalls  insurance  underwriting  frequency_and_severity 
june 2012 by jerryking
With a Long List but Short on Money, F.D.A. Tackles Food Safety - NYTimes.com
By WILLIAM NEUMAN
August 22, 2011

A landmark food safety law passed by Congress last December is supposed
to reduce the frequency and severity of food safety problems, but the
roll call of recent cases underlines the magnitude of the task....The
agency is taking on the expanded mission at a time when Washington
budget-slashing means that regulators have little hope of getting
additional money and may instead have their budgets cut by Congress....A
budget freeze or cuts would have the greatest impact on the ambitious
increase in inspections called for under the new law, which ramp up each
year.

“Writing rules is inexpensive (jk: i.e. policymaking is easy); enforcing them is expensive (jk i.e. implementation is hard), said David W. Acheson, a former associate commissioner of the F.D.A. who is now a
food safety consultant. “There will be a public health impact because
enforcement won’t be to the extent they want to do it.”
product_recalls  implementation  food_safety  hard_work  FDA  cost-cutting  policymaking  public_health  enforcement  regulation  pairs  frequency_and_severity  regulators  cutbacks  quotes  rule-writing  budget_cuts 
august 2011 by jerryking
Death by cellphone? Put the fear industry on hold - The Globe and Mail
Jun. 04, 2011
Trevor Butterworth is a NYC-based journalist who specializes in risk
analysis & phony health scares. “I’ll tell you what we should be
really worried about,” he said, “Lawn mowers.” “Scientists and
researchers aren’t very good at communicating risk,” says Butterworth.
And people aren’t very good at understanding it. We are far more fearful
of the extraordinary, low-risk things that hardly ever kill us
(terrorists, airplane crashes, shark attacks) than the ordinary
high-risk things that kill us all the time (driving to Grandma’s for
Sunday dinner)..

Our estimate of risk is anything but rational....Geoffrey Kabat is the
author of Hyping Health Risks: Environmental Hazards in Daily Life and
the Science of Epidemiology. He says that many different actors – not
just the media – contribute to the hyping of health risks. They include
scientists promoting their results, health & regulatory agencies
that need issues to promote, as well as activists, politicians &
lawyers.
mobile_phones  cancers  Margaret_Wente  Communicating_&_Connecting  communicating_risks  risks  books  frequency_and_severity  low-risk  high-risk  risk-assessment  health_risks 
june 2011 by jerryking
Spillonomics - Underestimating Risk - NYTimes.com
May 31, 2010 |NYT | By DAVID LEONHARDT. The people running BP
did a dreadful job of estimating the true chances of events that seemed
unlikely — and may even have been unlikely — but that would bring
enormous costs....We make two basic — and opposite — types of mistakes.
When an event is difficult to imagine, we tend to underestimate its
likelihood. This is the proverbial black swan...On the other hand, when
an unlikely event is all too easy to imagine, we often go in the
opposite direction and overestimate the odds.
BP  risk-taking  risk-assessment  oil_spills  mistakes  black_swan  underestimation  underpricing  unthinkable  overestimation  dual-consciousness  unimaginable  frequency_and_severity  improbables  disasters  disaster_preparedness  imagination  low_probability 
june 2010 by jerryking
Messy Times for Ben Bernanke and the Fed - NYTimes.com
May 14, 2010 | New York Times | By SEWELL CHAN. "we had neither
the mandate nor the tools to be the financial system’s supercop. "
Notes: (1) read “The Great Contraction, 1929-1933,” in which Milton
Friedman and Anna Jacobson Schwartz blamed the Fed’s failure to expand
the money supply for the Depression’s severity and duration. (2)
“Because I appreciate the role of chance and contingency in human
events, I try to be appropriately realistic about my own capabilities. I
know there is much that I don’t know.”

— Ben S. Bernanke, May 22, 2009
(3) “Keep a ‘gratitude journal,’ in which you routinely list
experiences and circumstances for which you are grateful.”

— Ben S. Bernanke, May 8, 2010
economists  Benjamin_Bernanke  U.S._Federal_Reserve  gratitude  messiness  pretense_of_knowledge  Great_Depression  Milton_Friedman  humility  unknowns  chance  luck  contingency  books  economics  economic_history  financial_system  frequency_and_severity 
may 2010 by jerryking
The "Warning" Czar?
Oct. 17, 2009 | - Adam Smith, Esq.| by Bruce MacEwen. The US
has a "national intelligence official for warning", Kenneth Knight, who
oversees a staff of a half-dozen analysts whose job is to monitor the
rest of the intelligence community, challenging their analyses and
assumptions. The goal is to to avoid surprise. One of Knight's core
insights is the difference between what he calls the "simple
likelihood-of-the-event versus impact-of-the-event calculation." Knight
thinks you can systematize this type of analysis by being understand
and being beware of the cognitive biases of experts; by training; and by
creating an institutional check--a warning staff or Red Team. Beware
analytical frameworks--know their limitations.
Bruce_MacEwen  strategic_thinking  security_&_intelligence  systematic_approaches  contrarians  risk-management  counterintuitive  red_teams  anticipating  biases  surprises  warning_signs  devil’s_advocates  frequency_and_severity  intelligence_analysts 
october 2009 by jerryking

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