Page 237 - RISK Management IC 86

The Insurance Times

Ans7b) Where there is no statistical information available, risk
manager uses Subjective Probability. Subjective
Probability - Though sometimes probabilities attached
to possible outcomes from a decision are based upon
statistical observation, this is not always possible. In
these circumstances, the tendency is usually to disregard
the situation as one of pure uncertainty.

However often subjective data is available in such a way
that some estimate of the probability can be made. The
subjective data often consists of personal judgements,
and hence its value varies according to the training,
experience and common sense of the person involved.

Also, often in risk management decision making
situations, there is a lack of statistical data, and the use
of subjective probability estimates, or the subjective
modification of scant statistical data, is necessary.

However, before subjective judgements are made, all
available facts should be collected and as many expert
opinions should be sought. Subjective probability
estimates are a mixture of statistical observation and
personal judgement. Though skeptics often find these

Website: www.bimabazaar.com Call: 033-22184184 / 40078428 238

Copyright@ The Insurance Times. 09883398055 / 09883380339