ABSTRACT
This chapter introduces the mathematical foundations of risk and decision theory. Topics include elements of probability theory—the original formalism for studying the nature of risk. A protocol for writing a risk statement is the Condition-If-Then construct. This construct is a recognition that a risk event is, by its nature, a probabilistic event and one that, if it occurs, has unwanted consequences. In engineering risk management, decision makers often need to order risks from most-to-least critical for a variety of purposes. In engineering risk management, value functions can be created to measure the relative criticality of each risk in a set of competing risks. Risk criticality can also be measured as a function of multiple evaluation criteria. A protocol for writing a risk statement is the Condition-If-Then construct. This construct is a recognition that a risk event is, by its nature, a probabilistic event and one that, if it occurs, has unwanted consequences.
