91 How can experience or empirical data help in managing risks?

David explains that experience and empirical data will help with managing some types of risk but not others. Find out which!

[arvinsilberman]

Hello Risk Doctor, I had a quick question:

Within likelihood, you say there are two types: Probability and Frequency, for one-time risks and recurring, respectively.

It seems that there are three types:

How likely is it to occur? (Likelihood)
How confident you are? (Probability)
How frequent is it to occur? (Frequency)

In the sense, for a one-time Risk you may ask:
How likely is it to occur? Answer: 20-30%
How confident are you? Answer: 90%

And for a recurring Risk you may ask:
How frequent is it to occur? Answer: 10 ARO
(ARO: Annualize Rate of Occurrence)

My question is for one-time risks is it better to have two characteristics? (Pardon me using the word Likelihood separately from Probability for this instance)

And for recurring risks is it enough to have only frequency assessed? (Is “Likelihood” as I’m defining it included in frequency? And since frequency is based on past data is it a justifiable practice to not assess Probability?)

I appreciate your response in advance!! Hope you are doing well.

Please feel free to re-correct the hierarchy of terms, if you wish. I am aware that in these videos you have stated Probability and Frequency to be part of Likelihood.