When decisions are made without perfect knowledge of the results that may ensue, an unavoidable exposure to risk occurs. Petroleum industry business decisions often carry substantial economic consequences, thus it is critical to understand the risk involved. Exploration provides a suitable context for examining risk analysis issues. A common means of handling risk is to quantify it numerically in the form of probabilities. Conventional probabilistic risk analysis is appealing in that a complex situation can be reduced to a mathematical problem subject to computation. However, a critical examination of the extension of probabilistic techniques to typical business situations raises concerns. Logical inconsistencies are encountered when the theory of probability is applied in practice due to the limited number of opportunities normally available to evaluate the outcome of decisions. Specific concerns with probability based techniques are discussed as grounding for an alternative approach that seeks to avoid their limitations. A different paradigm is suggested to comprehend and manage risk, including a rationale for decision making without recourse to numerical probabilities. Risk is expressed in terms of a reasonable range of possible outcomes and described by linguistic statements. The decision process encourages quality technical analysis to reduce uncertainty, contingency planning, and mitigation measures that may allow acceptance of the risk that remains.

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