Original Paper

Natural Hazards

, Volume 64, Issue 2, pp 1707-1716

Hazard management and risk design by optimal statistical analysis

  • Cheng-Wu ChenAffiliated withInstitute of Maritime Information and Technology, National Kaohsiung Marine University Email author 
  • , Kevin Fong-Rey Liu Affiliated withDepartment of Safety, Health and Environmental Engineering, Ming Chi University of Technology
  • , Chun-Pin TsengAffiliated withChung Shan Institute of Science and Technology, Armaments Bureau
  • , Wen-Ko HsuAffiliated withResearch Center for Hazard Mitigation and Prevention, National Central University
  • , Wei-Ling ChiangAffiliated withDepartment of Civil Engineering, National Central University

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Abstract

Elicitation methods are used in decision making with respect to risk hazards to allow a researcher to infer the subjective utilities of outcomes from the observed preferences of an individual. A questionnaire method is presented, in this study, which takes into account the inevitable distortion of preferences by random errors and minimizes the effect of such errors. Under mild assumptions, the method for eliciting the utilities of many outcomes is a three-stage procedure. First, the questionnaire is utilized to elicit responses from which a subjective score is defined. Second, individual risk factors are discussed. Finally, the regression model presents individual risk preferences given the overall organizational risk culture, risk management policy, risk identification, and risk analysis. This paper addresses how company managers face risk and their tolerance of risk with respect to risk management.

Keywords

Risk hazard assessment Computer aided Financial insurance