We all were sea-swallow’d, though some cast again, And, by that destiny, to perform an act
Whereof what's past is prologue, what to come
In yours and my discharge.
–The Tempest, Act 2, Scene 1
We are pleased to introduce this Special Issue of Risk Analysis addressing the risk of extreme and catastrophic events.
The topic of extremes is of interest across applications, including health, environment, engineering, economics, security and defense, food and agriculture, risk communication, critical infrastructure, security, defense, disaster preparedness, and others.
The dimensions of the topic include theory, methodology, and application of the multifaceted risk of extreme and catastrophic events, uncertainty analysis, decision theory, emergent and future conditions, probabilistic models, finance and management, performance evaluation, large-scale systems, expert elicitation, statistical modeling, and many others.
The diverse articles of this Special Issue represent the expertise of the audience and contributors of our journal, as follows.
Pate-Cornell describes how risk management can proceed when statistics are insufficient because the sample may be too small and/or the system may have changed. The article addresses in turn ambiguity; aleatory and epistemic uncertainties; monitoring of signals, precursors, and near-misses; and organizational factors that shape human performance and influence the potential for errors.
Haimes posits that to be effective, preparedness and response to catastrophic events must address and model the inherent interconnectedness and interdependencies among humans, organizations, and cyber-physical infrastructures as complex systems of systems. Furthermore, relating the couplings among the subsystems to the shared state variables of the subsystems’ models enhances our understanding of the roles of vulnerability and resilience in risk analysis.
Ding, Gerst, Bernstein, Howarth, and Borsuk describe historical investment returns and the occurrence of rare economic disasters to obtain nation-specific estimates of both disaster probabilities and preference parameters. The results suggest that society is more averse to risk than typically assumed in integrated assessment models. The article furthermore identifies where there are systematic differences in risk preferences among nations.
Chiu, Wong, and Li describe an application of the dynamic safety-first principle of Roy in continuous time. The article establishes key principles of asset and liability management. The authors invoke their experience from the management of pension funds to guide investments in disaster preparedness for large-scale systems.
Zhou, Lambert, Karvetski, Keisler, and Linkov describe how diversified flood protection could be effective to decrease the losses from extreme flooding. The results suggest the importance of understanding correlations across the variety of asset types—including flood walls, levees, warning systems, etc.—in large-scale flood protection.
Kazemi and Mosleh adapt techniques of physical sciences and engineering for model uncertainty and expert accuracy to obtain improved estimates of credit risk. The article synthesizes models and historical data from multiple sources. The results help to identify significant departures from nominal predictions due to events such as the 2008 global banking crisis.
Ayyub, Haralamb, Braileanu, and Qureshi et al. describe a use of real property and other data to construct a detailed forecast of the future costs of sea-level rise. The aim is to quantify the impacts of flooding to a variety of infrastructure systems in the vicinity of a world capital. The article identifies the contributing factors to a $25 billion societal loss from catastrophic flooding.
Cox describes concepts and examples for catastrophic hazards with uncertain or unpredictable frequencies and severities, hard-to-envision and incompletely described decision alternatives and consequences, and individual responses that influence each other. The article identifies needs for innovation to complement existing normative decision theories and to provide for disaster-resilient communities.
Bristow describes an integrative and adaptive systems methodology to analyze risk such that strategic interactions among multiple participants are considered. The article demonstrates its methodology in a case study of a maritime transportation infrastructure system of systems.
Burgman, Franklin, Hayes, Hosack, Peters, and Sisson describe extreme risks in ecology, with a focus on methods to evaluate the likelihood of extinction and quasi-extinction of threatened species. The article quantifies the likelihood of establishment and spread of invasive pests, and addresses how expert judgment can be effective to assess these extreme risks.
Powers, Powers, and Gao address risk management of catastrophes through the mathematical modeling of loss portfolios. The article explores the boundaries among strategies of pooling, transfer, and avoidance. The results suggest that there are decreasing benefits of pooling as the tails of severity distributions become heavier.
Virolainen describes experience deploying several levels of safety management, including probabilistic risk assessment, qualitative and quantitative analyses, etc., for the design and operation of nuclear power plants that are vulnerable to extreme events.
Cirkovic describes a methodological challenge to address low-probability scientific theories that predict catastrophic outcomes with large probability. The article addresses how these “small” theories cannot be rejected outright, and suggests how indeed they tend to raise significant moral or ethical questions for decisionmakers and policymakers as well as analysts.
Finally, Rick Reiss provides a review of a new book addressed to both the non-specialist and specialist in risk of extreme events, Megacatastrophes! Nine Strange Ways the World Could End, by David Darling and Dirk Schulze-Makuc. The book makes a broad analytical comparison of diverse sources of risk to humanity including infectious diseases, climate change, extraterrestrial life, and others. The review points to a few contentious details while applauding the relevance of the arguments and material of the book to how the risk of extremes is conceived, perceived, and communicated between the public and risk professionals.
We sincerely hope that this collection of articles will be engaging and useful in research and practice of risk analysis.
We invite reflections from the readers of Risk Analysis and look forward to receiving feedback directly and through the latest media of the Society for Risk Analysis, including the Risk Newsletter.