I had an interesting conversation this week on the topic of risk. As you may know, risk is the combination of consequence (what happens) and likelihood (chance of it happening). The concept of consequence is generally easy to understand, but likelihood is sometimes a source of contention.
This particular conversation was concerning the determination of the criticality of a piece of equipment and centered around whether likelihood should be based on the history of the circumstances you are considering. My colleague was arguing that the chances of this particular piece of equipment to fail was directly tied to the failure rate of this piece of equipment at this point in time (Historic). I asserted that the chances of failure is more of a statistical or general probability (Experiential). Continue reading
