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Accounting and Risk

Accounting and Risk. 6.2.08. Royal Society (as quoted by Adams, 1995; 8).

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Accounting and Risk

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  1. Accounting and Risk 6.2.08

  2. Royal Society (as quoted by Adams, 1995; 8) • On risk …“the probability that a particular adverse event occurs during a stated period of time. Or results from a particular challenge. As a probability in the sense of statistical theory risk obeys all the formal laws of combining probabilities” • On detriment… “a compound measure combining the probability and magnitude of an adverse effect”.

  3. Royal Society (as quoted by Adams, 1995; 22) • On detriment… “a numerical measure of the expected harm or loss associated with an adverse event ” – requires that there be a scale “to facilitate meaningful additions over different events”.

  4. Adams, 1995; 25 • “Scientific uncertainty about the physical world, the phenomenon of risk compensation, and the interactive nature of risk all render individual events inherently uncertain”.

  5. Royal Society (as quoted by Adams, 1995; 4) • ….stated there is a gap between what is scientific and capable of being measured and the way in which public opinion gauges risks and makes decisions. “Objective risk” …scientific basis is distinct from “Perceived risk” ...policy basis

  6. Adams, 1995; 5 • Risk-management at an individual level…. all done in the head of the individual. • But when institutions assume responsibility for risk management, it becomes difficult to identify where the balancing act is done. ………organized uncertainty (Power, 2007;7) …..internal control as risk management (Power, 2007;48)

  7. Adams, 1995; 26 • “uncertainty… is a realm not of calculation but of judgement”. Irwin, 1996; I • of “post-normal science” that includes stakeholder views …….of “legitimate perspectives” ………from risk analysis to risk governance (Power, 2007;12) ….going public on private control (Power, 2007; 53)

  8. objective or statistical probability UKCIP08 • a numerical statement where a situation is well understood and where all outcomes are accounted for examples include tossing a coin or choosing a card at random

  9. subjective or inductive probability UKCIP08 • an estimate based on the available information and strength of belief examples include horse-racing odds or taking out insurance…and probabilistic climate projections! …from risk society to opportunity society (Power, 2007; 21)

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