subjective probability

This tag is associated with 11 posts

More for your money

I promised to review the Infrastructure Risk Group report on Managing Cost Risk & Uncertainty In Infrastructure Projects, a report which was launched last month at the ICE with the sponsorship of the IRM. The report is a result of work undertaken as part of the Infrastructure UK investigation of the high cost of infrastructure projects.  […]

Proud to be a war quant

I’ve just re-read Douglas W Hubbard’s The Failure of Risk Management.  It’s an odd book in that while I agree with most of what’s in it, I’m not particularly convinced by the overall story suggested by the subtitle: Why It’s Broken and How to Fix It. Hubbard’s theme is that we do not do enough, […]

Words in his mouth

In the course of reviewing Doug Hubbard’s book on failing risk management, I thought it was worth a little wanderette on how much Thomas Bayes has been abused, or bigged up depending on how you see it.  I thought it would go as follows. “Bayes’ contribution to posterity was to get his name against a formula for joint probabilities which […]

Fools and liars

My ears are burning (metaphorically).  I’ve just read Bent Flyvbjerg’s paper on quality control and due diligence in project management.  His theme is the inaccuracy in forecast project costs and benefits.  Specifically, the tendency to underestimate costs and overestimate benefits is attributed to the ‘planning fallacy’, a creation of our old friends Tversky, Kahneman and co.  The source of […]

Risk registers, bloody risk registers

It all sounds so simple.  Just make a list of all the risks.  Then you can start figuring out how to prioritise them and manage them in a comprehensive and visible way.  Job done. This was how it seemed back in the early 90s when we took some tools that had proven quite effective for the management of […]


One of my previous Wanderings mused on the power of soundbites, and specifically the encomium, “nothing between men is 3 to 1.”  Turned into more mathematical language we get the Harry the Horse Theorem: in a two point sample space where the outcome is affected by the action of humans, managers, or anyone else who thinks […]

Three to one

The power of a nice soundbite …  The title of this site is based on a quotation that I, personally, find a very evocative expression of the risk in business problem.  I was reminded of another elegant problem framer whilst getting stuck into Antifragile, Nassim Nicholas Taleb’s final volume of his trilogy on risk.  This, like […]

The profession that knows it all

The theme which underpins Clouds of Vagueness is the inherent difficulty of mastering an uncertain future and the inadequacy of our standard risk management techniques to help with this.  So I was delighted to see the paper by Michael Power of the LSE in the journal Accounting, Organisations and Society, with the provocative title The risk management of […]

Risk appetite – a bad idea

It’s a truism that you can’t do anything – or even nothing – without taking risk.  This is an important issue for all organisations, but the discussion of what risk to take has become unnecessarily obscured.  Specifically it has become bogged down in the unhelpful concept of ‘risk appetite’ and this has added to the […]

Organisational risk taking – a simple view

At the core of organisational risk management lies the question of what risks to run.  You know the organisation cannot achieve its purpose with certainty.  You know you can take steps to control risk – to some extent.  You know that your chance of success will be improved if you seek out and grasp opportunities.  And you think […]