Authors: Rudiger Rackwitz
Addresses: Technical University Munich, Arcisstr. 21, 80290 Munich, Germany
Abstract: Recent developments in risk acceptance for technical facilities exposed to man-made and natural hazards are reviewed and discussed. Present value lifetime utilities involving the utility from consumption, discounting and survival probabilities by predictive cohort life tables are derived. Suitable parameters for the utility function are based on the so-called work-leisure optimisation principle. Intergenerationally acceptable, time-dependent discount rates are proposed. A risk acceptability criterion involving the increments in costs to reduce risks, the associated reductions in the failure rate and a constant defining of the societal value of a statistical life and the corresponding willingness-to-pay is given. These values are computed for a number of countries for two mortality reduction schemes. An example illustrates the results.
Keywords: expected lifetime utility; life quality index; LQI; risk acceptability; statistical life value; willingness to pay; risk assessment; risk management; technical facilities; hazards; failure rate; mortality reduction.
International Journal of Risk Assessment and Management, 2007 Vol.7 No.6/7, pp.922 - 944
Available online: 23 Jul 2007 *Full-text access for editors Access for subscribers Purchase this article Comment on this article