ABSTRACT
Risk is a long-term average of the undesirable effect of possible events. There are alternate definitions of risk, and diverse preferences for nonbusiness applications or catastrophic situations such as in healthcare, national security, or personal finance. The event must be explicitly identified. Risk can be reduced by prevention, such as greater maintenance attention, which would reduce the probability of an event. Greater maintenance attention would be a different treatment, and it would have its own cost. The expected frequency will depend on equipment age, operator’s physical ability, operator’s experience, maintenance practices, supplier of replacement parts, process operating intensity, etc. The calculation of risk should be grounded in data on probability; but substantial interpretation is needed to estimate the financial penalty of the event, and also to propagate the single event probability to parallel cases and multi-year consideration. Although risk could be presented as using simple probability rules, that would misdirect the reader.
