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Example 5.1 (Choosing the option with highest risk)

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In many decision situations, we are considering just two options: to perform an activity or not. In the North Sea, developing oil and gas fields represents risk to the people working there and to the environment due to possible oil spills. The safest option has clearly been not to develop the fields, but still decisions have been made again and again to develop new fields. The reason for this is obviously that the benefits are very large. What we accept is thus to get a certain set of benefits in return for taking a certain risk.

Risk Assessment

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