CRAG – IRGC Symposium 2013: Uncertainty – From Insight to Action

 

This symposium was jointly organised by the EPFL Center on Risk Analysis and Governance (CRAG) and the International Risk Governance Council (IRGC). It addressed important aspects of how uncertainty is dealt with in research and practice of risk management.

Downloads

Conference brochure
Plenary Sessions and Workshop detailed programmes (including speaker abstracts & bios)

Slides Plenary Sessions
Slides Workshop 2: Decision making under uncertainty
Slides Workshop 3: Governance of energy transition

IRGC made all plenary session contributions available to watch on video. Click on the title of a presentation below to re-watch the talk.

 

Risk is a matter of probability and severity, but there are uncertainties involved in their assessment. As a consequence, there are also uncertainties inherent in the impact of risk. In order to enable better informed decisions, describing and dealing with technical uncertainties must not be ignored and is an important element of risk analysis and governance. This symposium addressed the dealing with uncertainty for public and corporate planning and decision-making.

 

20 and 22 November: Plenary sessions

 

Wednesday 20 November – Understanding and Managing Uncertainty

Overview of the dimensions, components and implications of uncertainty that risk analysis and governance must account for and deal with.

Opening session

  • Philippe Gillet (EPFL President a.i. and Provost, IRGC Chairman)
    Welcome and introduction to CRAG
  • Charles Kleiber (IRGC Chairman a.i)
    Introduction to IRGC and its history
  • Wolfgang Kröger (ETHZ Risk Center)
    Risk governance: Overcoming silo thinking and approaches  slides  video
  • Janet Hering (EAWAG, ETHZ, EPFL, CRAG Scientific Director)
    Goals of the symposium and workshops  slides  video
  • Benjamin Zweifel (WSL)
    Avalanche risk in recreational activities: how people deal with uncertainty  slides  video
  • Granger Morgan (Carnegie Mellon, IRGC Scientific and Technical Council Chairman)
    Uncertainty: An introduction  slides  video

Plenary session

Download: Abstracts and bios

 

Friday 22 November – Governing and Communicating Uncertainty

Following in-depth discussion in the parallel workshops the day before, this session entered into more details about how to deal with uncertainty and risk. Speakers focused in particular about the specific challenges related to communicating and developing comprehensive governance approaches that account for how people perceive uncertainty.

Download: Abstracts and bios

 

21 November: Parallel workshops

 

Risk Quantification 

Organised by: Anthony Davison (EPFL), Damir Filipovic (EPFL, Swiss Finance Institute)

Risk quantification is a key element of risk analysis and governance, and has its roots in statistics and stochastic modeling.  Its purpose is to measure the likely sizes of risks and their physical and economic consequences, in order to underpin their management and insurance. The focus of this workshop was on the interplay between extreme value statistics, insurance, and risk management. It addressed academics and practitioners from various domains, albeit with a particular emphasis on environmental, financial and insurance applications, in order to foster the interaction of researchers across and beyond EPFL with an interest in the methods and applications of risk quantification.

Speakers:

  • Paul Embrechts (ETHZ)
    Model uncertainty and risk aggregation: An academic response to Basel 3.5
  • Andreas Schraft (Swiss Re)
    Quantification of natural catastrophe risk for reinsurance
  • Claudia Klüppelberg (TU Munich)
    Modelling and estimation of extreme events observed in space and time
  • Jonathan Tawn (Lancaster University)
    Extreme value methods for univariate and spatial flood risk assessment
  • Hansjörg Albrecher (UNIL)
    On theoretical and practical aspects of catastrophe insurance
  • Johanna Neslehova (McGill University)
    Assessing dependence between extreme risks

Download: Agenda, abstracts and bios

 

Decision Making under Uncertainty: Behavioral Aspects

Organised by: Thomas Weber (EPFL), Rüdiger Fahlenbrach (EPFL)

When facing risky decisions, individuals often make choices that deviate from those of a fully rational homo economicus. The “human touch” in decision making under risk was the theme of this workshop, with speakers from academia and practice exploring the effects of behavioral shortcomings on individual and group payoffs, as well as on the stability of systems such as financial markets. Central questions include how decision makers respond to incentives, and how behavioral insights can inform the design of systems that are resilient to both human (mis)behavior and randomness. Applications ranged from resource allocation and market mechanisms to operations and risk management.

Speakers:

  • Peter Bossaerts (University of Utah)
    Humans and financial markets: An evolutionary mismatch?
  • Thomas Epper (ETHZ)
    Foundations and Implications of Probability-Dependent Risk Attitudes
  • Boris Galonske (Oliver Wyman)
    Implementation of risk-return portfolio management and decision making in large corporates
  • Pierre Lauquin (Nestlé)
    Nestlé: Structured approach to face risk and crisis
  • Martin Weber (University of Mannheim)
    How much to invest into risk or Can we do the trade-off between risk and return?

Download: Agenda, abstracts and bios

 

Governance of Energy Transition

Organised by: Matthias Finger (EPFL), Ortwin Renn (University of Stuttgart, Helmholtz Center Energy Trans, IRGC), Daniel Favrat (EPFL)

Many countries – among which Switzerland and Germany – have announced ambitious plans to phase out nuclear energy and to substantially reduce their CO2 emissions. Switching production to more renewable energy sources (in particular wind and solar) implies a profound energy transition, which is only achievable if the major stakeholders (power producers, grid companies, industrial consumers, and most of all citizens) will play the game.

This workshop addressed the challenges and corresponding economic, social and political risks of such profound energy transitions for national policy makers and identify best practices and possible models for successful energy transition.

(1) Dealing with uncertainty in energy scenarios

Energy transition is embedded within a complex sociotechnical system.  Energy scenarios are typically used to inform policy-makers and market-players, but such scenarios are often laden with a myriad of uncertainties, such as the performance of new innovative technologies, the capacity of the production system to adapt to changing conditions as well as stakeholders’ acceptance of transition pathways. The first session aimed at addressing a series of questions related to how energy scenarios integrate uncertainty.
• What are the main features of energy scenarios?
• Are traditional quantitative or model-based scenarios sufficient for the current challenge of energy transition?
• How are different types of uncertainty – technological, economic, environmental, social and geopolitical – characterized and dealt with in the design and evaluation of scenarios?
• How can energy scenarios account for uncertainty of the demand, including societal preferences?

Speakers:

  • Swiss approaches: Matthias Gysler (Chief Economist, Federal Office for Energy)
    Switzerland’s Energy Strategy 2050
  • German approaches: Wolfgang Weimer-Jehle  (University of Stuttgart)
    Addressing Societal Uncertainties in Energy Transition using “Context Scenarios”
  • Ines Azevedo (Carnegie Mellon University)
    The Need to Account for Uncertainty in Forecasting
  • Andreas Rudinger (IDDRI)
    The Use of Energy Scenarios in the French Debate on Energy Transition

(2) Communicating and understanding consumer behavior

Energy transition has both national and cross-border effects, affecting producers and consumers alike. Supply and demand dynamics are driven, for instance, by price mechanisms (e.g. relative price of coal) and by ratcheting expectations (e.g., on green growth and economic prosperity).  These different forces can be conflicting. The second session addressed how to foster sustainable behavioral change among the relevant stakeholders, possibly through large societal debates.

• What are the alternative mechanisms for engaging stakeholders, and in particular final consumers in the energy transition debate?
• Is it realistic to believe that end-consumers can have a significant impact on overall energy demand in the future?
• What kind of instruments can be designed to encourage consumers to make the right decisions?
• How to set hard (e.g., end-user energy cost) and soft (possibly “nudge”) incentives to promote new functions such as flexible processes and transformation of consumers into “prosumers” as in co-generation?

Speakers:

  • Daniel Favrat (EPFL)
    The Swiss-Energy Scope: An Energy Calculator for Switzerland
  • Ilan Chabay (IASS, Potsdam)
    Communicating Complex Energy Technologies and Policies to Stakeholders and the Public 
  • Rainer Carius  (Ministry for the Environment, Baden-Württemberg)
    Quad Participation Project of the Integrated Concept for Energy and Climate Protection
  • Sophia Becker (ZIRIUS, University of Stuttgart)
  • Aline Clerc (Fédération romande des consommateurs FRC)

Download: Agenda, abstracts and bios