“The only certainty is that nothing is certain.” — Pliny the Elder, Roman scholar, 23-79 CE
In the “The Flaw of Averages: Why We Understand Risk in The Face of Uncertainty,” author Sam L. Savage examines many of the “…common avoidable mistakes in assessing risk in the face of uncertainty.” In the construction industry and built environment, one example is assessing risk of adverse weather and weather events on the productivity and safety of schedule activities, equipment operations and work results. Savage explains why the traditional methods of assessing risk are “…so wrong so often,” leading to ineffective decision making and ineffectual weather risk management by contractors, owners and operators, for example.
Even experts in probability and statistics regularly make mistakes when confronted by everyday uncertainties.
Further, Savage notes that prior knowledge in the domain of statistics and probability is not required to understand the concepts and apply the tools to managing and mitigating risk. The flaw of averages is part of an approach generally referred to as “Probability Management,” offering potential solutions to the challenges and problems associated with assessing risk in the face of uncertainty. In the introduction, Savage describes how the Information Age “…offers electronic extensions… that can provide a new experiential feel for risk and uncertainty. Even experts in probability and statistics regularly make mistakes when confronted by everyday uncertainties.”
Many industries continue to be blind to the Flaw of Averages — managing weather risk across the construction industry and built environment
Savage organizes “The Flaw of Averages: Why We Understand Risk in The Face of Uncertainty” into three sections: Foundations, Applications and Probability Management. First, the Foundations section helps the reader “…intuitively grasp and visualize the consequences of uncertainty and risk.” Second, the Applications section applies the concepts from the first part Foundations to real-world use cases, as a foundation for assessing risk in the face of uncertainty. And third, the Probability Management section proposes solutions to the Flaw of Averages, based on technological breakthroughs, data structures and management protocols.
(Source: Savage, Sam L. The flaw of averages: why we underestimate risk in the face of uncertainty. John Wiley & Sons, Inc., 2012.)
More in the next blog series about weather planning, Weather Controls® and weather risk management for the construction industry and built environment…
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