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General Topics
Risk
Risk is defined as the potential for adverse, negative, or undesired events to occur, where the likelihood (probability) and impact (severity) can be assessed or anticipated. This topic is part of the ISGAN Wiki and is currently being developed. You can contribute directly by clicking the edit button, or use the Topic Builder for guided input. A confirmed wiki account is required. Register and allow up to three days for admin confirmation. Before contributing, read the ISGAN Wiki Editorial Guidelines. Any definitions or other content provided here are preliminary drafts for further elaboration.
Why this matters
Power grids are facing numerous challenges, driven by increasing complexity, higher energy demand, and a growing number of hazards/threats.1) These changing circumstances have significant consequences. On the one hand, the risk of a grid failure is rising; on the other hand, risks are becoming increasingly difficult to calculate. In addition to that it raises questions about insurability and the possible rise of costs for maintaining, financing, expanding power grids.
The evolving risks facing energy grids raise new questions regarding the maintenance, modernization, insurability, financeability of grids and calls for innovative efforts like smart grids
Shared definitions
Risk describes the probability of negative consequences affecting things that people value. A distinction must be made between risk assessment and risk management. Risk assessment refers to the, usually quantitative, calculation of the probability that a specific event will occur and its potential magnitude. Risk management refers to the process of dealing with risk, that is, reducing it to an acceptable level. 2)
Distinctions can be made between different forms of risk concepts. For instance, the classical form is technical risk, which is predominantly used by insurance companies and involves calculating the average probability of an event based on historical data. This means that the frequency with which a specific event occurred over a given period in the past is used to project the likelihood of its future occurrence.
However, this approach to risk calculation reaches its limits when historical data is lacking or unavailable, as is often the case with unprecedented environmental disasters. Furthermore, technical risk analysis fails to take into account that individuals perceive risks differently and, depending on their values, may be more willing to accept certain risks than others. Technical risk therefore represents only a fraction of comprehensive risk identification, assessment, and management. For example, psychological phenomena such as cognitive biases directly influence how people perceive risk. Consequently, individual actions are driven by perceived risk rather than by scientific, rational calculations. Therefore, these individual and personal factors must be taken into account when evaluating risk. 3)
- Risk distrubution on differnt acors. How wo mitigate Risk on electrical Grids (See Zio & Aven, 2011)
- Similar to Resiliance, how to mitigate risk, Risk manegement (how would that look like in the case of Critical infrastructure like power grids)
- Risk analysis (also Zio & Aven, 2011)
- Still something missing about Insurance and hedging
- Systemic risk and risk precived by individuals (see Renn, 1998)
Perspectives
Actors and stakeholders
- New Risks like the rise in the Frequency of natural disasters due to climate change raises questions about the need to insure critical infrastructure aswell as the potential rise of the cost of the insurence. Furthermore the rising need to ensure and the rise in costs of insurence, will have consequences for future investments for the expansion and modernisation of critical infrastructure as well as consequences on the cost for the end user
Technologies and infrastructure
- The growing implimentation of renuable Energy sources like solar and wind poses new challenges for power grids. - Smart meter, Flexibility of energy use. - rising Complexity - Interconnection of different parts of critical infrastructure (See Zio & Aven, 2011)
Institutional structures
- how can the state help with financing policy, lowering the Risk and therefore rise financibility of critical infrastructure
Distinctions and overlaps
Related topics
Topic notes
Editorial notes — when drafting, consider:
- The companion topic Uncertainty covers the Knight distinction between risk and uncertainty in depth — Risk should focus on calculable probability, insurance, hedging, and risk distribution across actors
- Risk as systemic property vs. risk as perceived by individual actors
- Cross-reference with Resilience (risk management vs. resilience building) and Scenarios (risk quantification in planning)