Risk Management, 5th Edition

Appendix D: Quantifying Expert Judgment

All risk assessment techniques or models share a common requirement: acquiring expert judgment as inputs. Inherent in judgment is a degree of uncertainty. When acquiring quantifiable expressions of judgment, the axioms of probability must not be violated:

• The probabilities of all possible events must sum to 1.

• The probability of any event, P(A), must be a number greater than or equal to 0 and less than or equal to 1 (0 ≤ P(A) ≤ 1).

• The probability of joint events is the product of the probability that one event occurs and the probability that another event occurs, given that the first event has occurred, (P(A) × P(B1|2A)). Under these circumstances, the events are termed dependent.

• When the probability ...