Risk Analysis and Decision Theory: Foundations

The triplet-based risk analysis of Kaplan and Garrick (1981) is the keystone of state-of-the-art probabilistic risk assesment in several applied fields. This paper performs a sharp embedding of the elements of this framework into the one of formal decision theory, which is mainly con- cerned with the methodological and modelling issues of rational decision making. In order to show the applicability of such an embedding, we also explicitly develop it within a nuclear probabilistic risk assessment, as prescribed by the U.S. NRC. The aim of this exercise is twofold: on the one hand, it gives risk analysis a direct access to the rich toolbox that decision theory has developed, in the last decades, in order to deal with complex layers of uncertainty; on the other, it exposes decision theory to the challenges of risk analysis, thus providing it with broader scope and new stimuli.